I’ve chronicled the saga of “buy-to-rent” for well over a year now. From some of its most exuberant phases to its now epic retreat (investment firm property purchases are now down 70% year-to-date).
It seems as if the pullback of private equity and hedge funds from this asset class is even more brutal in certain regions, with Blackstone now reporting its purchases in California down a staggering 90% this year.
Not to worry, I’m quite certain unemployed and deeply indebted recent college graduates will soon pick up the slack due to the anticipated resurgence of subprime lending.
From the LA Times:
The real estate arm of Blackstone Group, the largest buyer, has cut its California purchases 90% over the last year, a spokesman said. Santa Monica company Colony Capital reports a similar retreat. Oaktree Capital of Los Angeles, meanwhile, is looking to cash out by selling its portfolio of more than 500 homes, many of them in Southern California.
But prices have since been flat in Southern California. Many families are taking a pass on the more expensive homes. And the math doesn’t work on Wall Street either.
On Wednesday, some of the bigger players launched a trade group, the National Rental Home Council, to advocate for their interests in Washington.
“People want to live here, whether they buy or rent,” said Gary Beasley, chief executive of Oakland company Starwood Waypoint Residential Trust.
“Most of the low fruit has been harvested, but there’s still plenty of fruit in the tree,” Beasley said. “And we’ve got fruit pickers.”
Seriously, where do they find these people…
Full article here.
In Liberty,
Michael Krieger
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Slumlord Wannabe Blackstone Violates Local Housing Laws by Making Tenants Maintain Rentals
Posted on April 1, 2014 by Yves Smith
The yawning gap between private equity landlord sales talk and what they are delivering is finally being exposed.
One of the reasons many investors have been skeptical of the way private equity firms have gone full bore into buying distressed single family homes is that property management is a hands-on business even when it’s done it the most favorable possible setting, an apartment building. Individuals who have invested in single family home rentals almost without exception report that even when they found it to be an economically attractive proposition, it was still oversight-intensive.
But the biggest fish in this ocean, Blackrock, is clearly taking the opposite approach, of doing as little as they can to maintain the houses and trying to fob off the responsibility onto the tenant, even when local regulations clearly prohibit it. So managing dispersed homes is no problem if you never planned to do the job in the first place.
Blackstone tries to evade this duty formally, through lease terms, and informally, by making themselves inaccessible.
And Doug Terpstra’s Arizona example suggests that even low-density, supposedly conservative states aren’t necessarily any landlord-friendlier. I welcome comments from any readers who can give a reading as to whether their state or municipality would permit Blackstone “the tenant eats most problems” style leases.
http://www.nakedcapitalism.com/2014/04/blackstone-slumlord-wannabe-violates-local-housing-laws-making-tenants-maintain-rentals.html