Evictions by Wall-Street Mega-Landlords Soar, Financialization of Rents Cause “Housing Instability”: Atlanta Fed

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It blames the Fed & Bernanke; the dark side of “healing” the housing market.

The housing collapse during the Financial Crisis keeps on giving. On Friday, Invitation Homes, a creature of private-equity firm Blackstone, and largest landlord of single-family rental homes in the US, filed with the SEC to raise up to $1.5 billion in an IPO. Deutsche Bank, JP Morgan, BofA Merrill Lynch, Goldman Sachs, Wells Fargo, Credit Suisse, Morgan Stanley, and RBC Capital Markets are the joint bookrunners and get to cash in on the fees.

Invitation Homes, founded in 2012, now owns 48,431 single-family homes, according to the filing. It bought them out of foreclosure and turned them into rental properties, concentrated in 12 urban areas. Revenues for the nine months through September 30 rose 11.4% to $655 million, producing a net loss of $52 million. It lists $9.7 billion in single-family properties and $7.7 billion in debt.

Blackstone was a pioneer in the post-Financial Crisis buy-to-rent scheme, including issuing the first rent-backed structured securities in November 2013. The collateral for the $479-million deal was rental income from 3,207 homes. Blackstone paid rating agencies Moody’s, Kroll, and Morningstar to rate the bonds; so nearly 60% of the debt was rated AAA. Other tranches carried lower ratings. The overall cost of capital to Blackstone from the securitization of these rents was about 2.01%. Cheap money! Thank you hallelujah QE and ZIRP.

Rent-backed securities have since become a common funding mechanism.

Other players in the buy-to-rent scheme have already gone public. American Homes 4 Rent, which owns about 48,000 rental houses in 22 states, went public in August 2013. It has produced a net loss every year since, sports negative EPS of -25 cents and a negative PE ratio of -84.

Starwood Waypoint Residential Trust was spun off from Starwood Property Trust Inc. and started trading in February 2014. In 2016, it merged with Thomas Barrack’s Colony Capital and changed its name to Colony Starwood Homes. Colony is now the third-largest single-family landlord. It too has lost money every year since going public, has negative EPS of -47 cents and a negative PE ratio of -62. Colony founder Barrack is now chairman of Trump’s inauguration committee.

But there’s a drawback: 32% of Colony’s properties in Atlanta and adjacent suburbs have eviction filings, by far the highest rate among the Wall Street landlords, according to a study by the Atlanta Fed on the impact of Wall Street landlords on surging “housing instability.”




The report doesn’t name names, but Ben Miller, co-author of the report, filled in the blanks for Bloomberg. Next in line in eviction rates: American Homes 4 Rent, HavenBrook, owned by Pimco, and Invitations Homes. The percentage of properties with eviction filings in Atlanta by the largest Wall-Street landlords:

The report indicated that eviction rates in some other cities are lower. But this being the Atlanta Fed, it focused on Atlanta, one of the hotbeds of the buy-to-rent scheme. And it focused on single-family rentals because Wall Street’s muscling into this space is new and perhaps a generational shift in the US housing market.

So how did this Wall Street landlord nirvana – and the ensuing “housing instability” – come about after the housing bust? The report blames the Fed, and Fed Chairman Ben Bernanke:

In unwinding their bank-owned properties, the GSEs [Fannie Mae, Freddy Mac, etc.], U.S. Treasury, and Federal Reserve innovated new structured transactions for disposing of hundreds of thousands of bank-owned homes, also known as real estate owned (REO). The Federal Reserve was the first to suggest that private equity firms were the one group with cash on hand to invest in foreclosed homes (Bernanke, 2012).

In 2012, the Federal Housing Finance Agency (FHFA), conservator of the GSEs, issued a pilot to develop structured transactions that could be used to sell its REO homes in bulk. The private market followed by developing and standardizing financial instruments to allow broader market investment in converting foreclosed homes into single-family rentals. Rental housing, traditionally the purview of mom-and-pop landlords, caught the attention of large financial firms.

Nationwide, an estimated 350,000 homes were purchased by institutional investors from 2011 to 2013, and these were spatially concentrated in cities like Atlanta with high numbers of bank-owned homes and the prospect of future home price appreciation. Today there is high concentration in the single-family rental business, with an estimated 170,000 single-family rental homes owned by the seven largest firms.

“My hope was that these private equity firms would provide a new kind of rental housing for people who couldn’t – or didn’t want to – buy during the housing recovery,” Elora Raymond, the report’s lead author, told Bloomberg. “Instead, it seems like they’re contributing to housing instability in Atlanta, and possibly other places.”

Evictions are cheap in Atlanta: about $85 in court fees and another $20 to have the tenant ejected, report co-author Michael Lucas told Bloomberg, which added: “With few of the tenant protections of places like New York, a family can find itself homeless in less than a month.”

The report points at the broader implications beyond poor neighborhoods: While “evictions are highly correlated with neighborhood characteristics such as education levels, change in the employment-population rate, and racial composition,” Wall Street landlords still filed for evictions at higher rates than smaller landlords after accounting for “property and neighborhood characteristics.” Why? The report:

One possible reason large corporate landlords backed by institutional investors may have higher eviction filing notices is that they may routinely use eviction notices as a rent collection strategy.

Bloomberg adds:

In interviews and court filings, renters and housing advocates said that some investment firms are impersonal and unresponsive, slow to make necessary repairs and quick to evict tenants who withhold rent because of complaints about maintenance.

“They want to get them out quickly if they can’t pay,” explained Aaron Kuney, a former executive of HavenBrook and now CEO of PE landlord Piedmont Asset Management in Atlanta. “Finding people these days to rent your homes is not a problem.”

Then there’s the expense of housing, which has soared, thanks to the Fed’s efforts to “heal” the housing market. According to the report, 53.4% of renters were “cost burdened in Atlanta” in 2014. More generally, homeownership has declined to a 51-year low, and “demand for rentals has caused urban rents to increase sharply”:

During the 2010 to 2014 period, low-cost rentals in Atlanta declined by more than 15%. Gentrification, or the influx of wealthier residents accompanied by rising property prices and the displacement of existing, lower-income residents, can be a factor in evictions.

The effect of evictions is “housing instability or insecurity”:

Families with insecure or unstable housing may move frequently, suffer eviction, or otherwise be at increased risk of homelessness.

Evictions can result in personal loss of property, trigger job loss, and lead to underperforming schools and poor student outcomes. Even an eviction filing that is resolved can mar a tenant’s credit record and bar that person from renting elsewhere or accessing public assistance.

At the neighborhood level, high eviction rates are associated with poor housing conditions, high rates of school turnover, and neighborhood and community instability.

But it’s not just Atlanta, according to the Atlanta Fed: “There is increasing documentation of an ensuing high rate of evictions in U.S. cities, partly due to tenants’ inability to afford higher rents.”

So is the Fed having second thoughts about its efforts to encourage Wall Street to muscle into the single-family home market in big urban areas, drive up housing costs around the country, and turn rents in to a finanzialized product? I doubt it. Bernanke, the engineer of all this, has moved on; and the Fed, credited with “healing” the housing market, never has second thoughts about its actions.

But the Fed is worried about “real wage” increases. It’s about cheap labor. Read… The Thing in the Jobs Report that Gives the Fed the Willies




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  105 comments for “Evictions by Wall-Street Mega-Landlords Soar, Financialization of Rents Cause “Housing Instability”: Atlanta Fed

  1. Jim Smith
    Jan 7, 2017 at 12:54 pm

    How do these firms stay in business with negative earnings, is it because they are booking profits on the price increase of their assets-homes.

    And as rates go back up, which they will do if their is wage inflation will all these firms have to sell?

    • Jan 7, 2017 at 1:04 pm

      They stay in business because they have access to cheap capital that they can burn with their money-losing operations. Investors support them on the hope that they’re sitting on big capital gains from their home purchases in 2011-2014.

      • Petunia
        Jan 7, 2017 at 1:33 pm

        They better reap those profits before some pissed off tenants file a class action against them. There are plenty of them out there.

        • kitten lopez
          Jan 7, 2017 at 5:40 pm

          but what about the predominance of arbitration clauses they probably already force renters to sign on the rental lease? those ubiquitous clauses are like the right-to-work laws that kill unions.

        • kitten lopez
          Jan 7, 2017 at 5:41 pm

          p.s. Petunia-
          and i love how you already called this one.
          i looove this place.
          happy new years youse guys.
          it’s gonna be a doozie.

      • Anon
        Jan 7, 2017 at 2:39 pm

        They stay in business because they continue to generate a positive cash flow from their operations. The reported “losses” are after depreciation on the houses, which have probably gone up in value. It is doubtful that they invested in houses in high crime ghetto neighborhoods. More likely the houses are in working class neighborhoods which have recovered in price (and rents) as the economy recovered.

        Don’t we all wish we could buy at the bottom of a cycle? That’s why Stephen Schwartzman is a multi-billionaire and we aren’t.

        • Hg
          Jan 10, 2017 at 1:10 am

          Point taken, thanks Stephen.

      • JB
        Jan 8, 2017 at 12:56 pm

        I see 2 data points to be gleaned from article:
        1.) rising evictions may be a backlash to unaffordable
        rents. rent increases have exceeded CPI .
        2.) As WR stated these companies are maybe “ZOMBIE”
        companies. i looked at INC/BALSHEET statement
        of SFR (COLONY STARWOOD) . this company needs
        constant cash infusions to remain a going concern. Interest expense erased all profits from operation. At what point will these losses exceed the asset gain from
        its homes ? this is not a berkshire hathaway stock pick .
        book value 24, stock price 29.50. what is the end game?

        • Meme Imfurst
          Jan 9, 2017 at 8:39 am

          Berkshire Hathaway….you mean Uncle Warren? Warren Buffet of Wells Fargo, who is one day at a time creating unethical practices for consumers? Same umbrella, and don’t forget that if any of these tenants get into trouble, well, Wells can put them into one of their “private prison” institutions. Such efficiencies…the American way. AND, look at who made all this possible for Uncle Warren, our exiting president. And all this at the expense of Americans who only dreamt of owning a home but never got any help near what the bank friends got.

      • Patrick Wilson
        Jan 9, 2017 at 7:39 pm

        What connections to Bush/Obama and federal lenders?

    • ron rose
      Jan 8, 2017 at 12:56 am

      Negative earnings is not really true. rental property is allowed a deduction for depreciation. $200000/25years=$8000 non cash deduction for every house they rent for example. so a reportable loss of $5,000/ house would really be. Cash profit of $3,000.

      • MarkinSF
        Jan 8, 2017 at 1:54 pm

        Against loan repayment of?

      • JB
        Jan 8, 2017 at 8:43 pm

        good point however this is interest expense which i believe is a cash item ,,, look at year ending 2015
        income statement
        http://data.cnbc.com/quotes/SFR/tab/7.2

  2. Petunia
    Jan 7, 2017 at 12:58 pm

    Voters need to start pushing for rent control in local areas and renter protections as well. The reason these mega landlords are quick to evict is that they add legal costs on to the evictions and that becomes another source of income, at least on the books. These companies are all money pits for the renters and investors. There are complaint websites devoted to these companies and all the complaints are fairly common. Slow to do repairs, poor quality of repairs, high rent increases, unreasonable conditions in the leases, dealing with the mega landlords is more trouble than it’s worth.

    Do yourselves a big favor and look for a rental elsewhere, and definitely don’t buy a house from them.

    • Richard Smith
      Jan 7, 2017 at 6:24 pm

      Really Petunia,,, Rent Control,,,, do you think some stupid bureaucrat with his slide rule and devining rod can determine the proper amount to rent a house for,,, the reason there are problems right now are GSEs such a fannie mae and Freddie mac and the every wonderful Fed

      • Petunia
        Jan 7, 2017 at 6:46 pm

        Just like the voters had to take back control of the govt because they weren’t listening, we need to take back control of our economy.

        • Peter Forsyth
          Jan 7, 2017 at 7:47 pm

          You can’t take control of the banks no matter how hard you try. Cancer can kill.

        • Marty
          Jan 8, 2017 at 5:16 am

          And exactly how is govt mandated rents “taking back control of our economy?”

          Better to have a pr campaign to alert renter so avoid these blood suckers.

        • Edward E
          Jan 8, 2017 at 7:39 pm

          Did the voters actually take back control of the government? That’s news!!!

          http://rationalwiki.org/wiki/Donald_Trump

          A large number of the Russian oligarchs are in fact not ethnic Russian…
          …Trump Jr. said at a real estate conference: “Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia”.[389]

      • Kent
        Jan 8, 2017 at 8:07 am

        @Richard Smith,

        Well, as this article demonstrates, obviously PE firms can’t get the job done.

      • two beers
        Jan 8, 2017 at 9:47 pm

        Strawman argument, Mr Smith. Rental prices aren’t determined by scawy bureaucrats, and you damn well know that. _After_ a tenant rents at market rate, rent control works by limiting annual increases to a pre-determined rate relative to CPI.

        There is also “vacancy control,” which similarly limits the increase of a vacant unit relative to CPI.

        What we need is “landlord control.” Adam Smith and David Ricardo specifically cited rent as a drain on the productive economy. Excessive rents _destroy_ economies. Smith and Ricardo detested landlords, and the govt-sanctioned scams they deploy to pilfer the hard-earned wages of honest working people.

    • david
      Jan 7, 2017 at 11:59 pm

      The biggest cost to a landlord is vacancy. Not sure if they file for the judgements they get on evictions but they are rarely collected. I have filed a few and got nothing, same with a few friends. Probably right they show it as an asset that is mostly worthless….but that seems to be the in thing nowadays.

    • Realist
      Jan 8, 2017 at 8:14 am

      Rent control isn’t maybe the smartest things to do. In Sweden rent control has distorted the housing situation quite nicely, causing shortage of housing simply because it isn’t profitable to build rental units and privately owned units do not cover the need. There aren’t enough with rental units owned by muncipalities/cities, causing people to being in line for years to being assigned such housing and now several municipalites have decided that migrants from MENA are prioritized for public housing so ordinary Swedes have to wait yet longer. The nicest touch is in Stockholm, where the city pays the rent for migrants if ordinary people do provide the housing, but the city pays considerably less than market rent ….by some strange reason this hasn’t been a success story, I wonder why ? Btw, the red-green majority led city council of Stockholm has made an interesting decision, ie fighters returning from Syria etc are to be provided with housing, education, medical care, social security etc on the teory that this will make good citizens out of them, this sounds unbelivable, but it is true.

      • Petunia
        Jan 8, 2017 at 10:45 am

        The madness is still in full swing in Europe. Here in American it is about to end — One way or another.

  3. unit472
    Jan 7, 2017 at 1:18 pm

    While a large landlord maybe more efficient managing large multi family properties I see this experiment in renting thousands of single family homes being the modern equivalent of ‘block busting’ that turned many an urban neighborhood into slums in the 50’s and 60’s.

    Rather than sell my first house I rented it out for a number of years. They were good tenants so when their second child had some health problems I worked with them even though they fell behind on the rent. In fact, I sold the home to them and since I wanted them to qualify for a loan I made no mention of any rent delinquency and they agreed to make up the delinquent rent when they could and they did! Everyone benefitted including the neighbors who kept a stable family in the house who would maintain it better than I, as an absentee landlord living 200 miles away, ever could.

    Somehow I doubt Starwood or Blackstone would be willing to work with a tenant experiencing temporary difficulties.

    • Anon
      Jan 7, 2017 at 2:48 pm

      I remember when Time magazine did a story in the late 1960’s on thousands of rental properties being abandoned in Brooklyn by their owners under New York City’s strict rent control laws. The landlords could not raise their rents enough to cover maintenace and property taxes.

      • Petunia
        Jan 7, 2017 at 4:11 pm

        Under rent control the landlords got to increase rents for capital improvements. I remember them installing a new kitchen sink and passing its cost along to my parents as a rent increase, same thing with appliances, and the new oil burning furnace.

        In the 60’s in NYC there was a big urban renewal push, which is how most of the housing projects got built. The landlords let the properties go in the hopes of having them purchased by the city or HUD. Those properties that didn’t get purchased were already too far gone by the time they stopped building subsidized housing. The landlords pocketed the rents and walked away, by then they had already been fully compensated for the value.

    • Paulo
      Jan 7, 2017 at 4:46 pm

      You’re a good person, Unit472. Imagine, treating people in a fair and equitable manner, perhaps like we would all wish to be treated? Good on you.

      My father-in-Law used to have rentals. He always worked with the tenants and was only burned a few times. In one case a family was several months behind in their rent. He talked to them about it and set up a system for gradual and blended repayment. Of course they did not whittle the owed amount down, but they sure had lots of toys (motorcycles, etc). One day, they installed a chunk of heavy gauge wire so they could run a dryer in the basement. They submitted the bill. Father-in-Law said, “You’re kidding, right? You owe me several thousand dollars and you are billing me for a chunk of wire”? (I think it was around $10). When they got pissy about it he said to me, “That is the most expensive piece of wire they will ever buy”, and took them to small claims court where he received a judgement against them. Plus, they chose to move out. And that is why I am not a landlord, especially where I now live. There are some great renters here, but there is always a group moving in to our Valley just ahead of the law, or wanting to live here at a distance from some Govt. Agency scrutiny. When they move on they tend to owe rent and always leave a big mess. It can be a real nightmare for owners.

  4. Phil Connors
    Jan 7, 2017 at 1:35 pm

    Welcome to Pottersville America; Bedford Falls is doomed until the spigot of zero-priced capital is closed and we can escape their debt serfdom.

    • Peter
      Jan 7, 2017 at 9:43 pm

      Bingo. You are spot on.

  5. mynamett
    Jan 7, 2017 at 4:04 pm

    Another scheme to extract money from the poor and transfer it directly to the rich.

    The average Joe does not have enough asset to borrow money at low interest rate like blackstone and others. The average Joe must borrow at an higher interest rate because he is a bigger risk for the banks ( or the rich if you want). Low interest rate is indeed equivalent to printing money for the rich only.

    Like I said there is a lot of money going around that is inflating assets (housing, stock market, oil price) the are producing few benefits for the average.

    When was the last time someone build a new manufacturing plant using gouvement money. Employing people is giving them hope, a desire to participate in their communities.

    This kind of money extracting scheme from the poor should be illegal and people doing it shout be dealt with the old fashion way. These kinds of extracting schemes are only destroying the fabric of society and causing more violence ( see Chicago and detroit).

    • william
      Jan 7, 2017 at 4:30 pm

      Consumer protection already exists. We shouldn’t try to stop the rich from getting richer serving the poor with necessities. I would prefer Wall Street to provide housing instead of the government. But we should be vigilant to stop abuses or fraud that hurt the poor.

      • Petunia
        Jan 7, 2017 at 6:21 pm

        There is no consumer protection anywhere for consumers, thanks to the Consumer Protection Board that is totally funded by the Federal Reserve. The consumer protection board in America is owned and operated by the banks. I thank Senator Warren for that piece of worthless dung.

        • JerryBear
          Jan 8, 2017 at 7:28 am

          You go girl! ^,..,^

        • katesweat
          Jan 9, 2017 at 7:14 pm

          better than having its funding subject to Congress.

        • d
          Jan 9, 2017 at 8:07 pm

          How is it better o have the funding controlled by the wolves, instead of the political grandstanders???

      • Chicken
        Jan 8, 2017 at 11:13 am

        Certainly these Wall Street landlords are counting on rates remaining low for longer?

      • Jungle Jim
        Jan 8, 2017 at 9:11 pm

        William, Wall Street is the government. Stopping fraud is the last thing they will agree to.

        Trump ran as an an outsider, but if you examine his appointments, they are nearly all insiders. I’m still naive enough to hope for the best from them but I’m very concerned.

  6. michael
    Jan 7, 2017 at 4:27 pm

    In retrospect re-inflation of the housing market was a fast way to facilitate a “recovery”. Rising housing allows buyers to further leverage themselves against their growing equity. Federal, state and local governments benefit further as taxes increase along with the home values.

    However I fail to personally understand how this is going to work out in the long run. Also i question how long zombies like Tesla and Uber will be able to secure money to continue to operate.

  7. Cyrus
    Jan 7, 2017 at 5:19 pm

    “Invitation Homes, founded in 2012, now owns 48,431 single-family homes, according to the filing. It bought them out of foreclosure and turned them into rental properties, concentrated in 12 urban areas. Revenues for the nine months through September 30 rose 11.4% to $655 million, producing a net loss of $52 million. It lists $9.7 billion in single-family properties and $7.7 billion in debt.”

    I hope the interest rates keep going up; then let’s see how they serve the interest to that $7.7 billion cheap money that they have been given.

    I watched a YouTube video a while ago that listed people who are behind rent backed securities, and most of them are the same people who created mortgage-backed securities in 2008. The same pitbulls and criminals are at it again, and why not? Did even one of them have to go to jail even one day for their crime?

    • Chicken
      Jan 7, 2017 at 11:25 pm

      “Did even one of them have to go to jail even one day for their crime?”

      I guess plenty of home owners were forced to sell at market lows, losing their equity and benefit of future recovery.

      The more things change, the more they remain the same.

    • Jim Smith
      Jan 8, 2017 at 10:57 pm

      Maybe my Bond math is off, but…..
      DV01 on 7.7b with a 200bp increase means ($154m) loss/yr
      on top of the already 70m/yr=224m/yr loss

      and a housing drop of 30+% (with a 200bp rise), not to mention brokers fees-which mean 9.7b in assets are now worth 6.2b.

      Negative equity, negative losses, on non-liquid assets

      Send me information on the IPO I need to jump on this…

  8. economicminor
    Jan 7, 2017 at 5:33 pm

    Managing single family rentals is a chore. Evictions are expensive and time consuming. Post or deliver a demand for funds first. Then wait what ever the days provided by whatever state law before you can actually file. Then you have to file with the clerks office. This costs money and time. Then someone certified by the courts has to deliver the eviction notice.

    Then you wait for the first court date which is for cause. At that point a couple weeks into the process when you get an actual hearing date. Around here is usually another 10 days. Which at any time along the line you can get paid up.. And IF the renter has an attorney or is a veteran, this whole thing can take a month or more. And then if you haven’t taken care of things, roof leak, broken this or that, heater, AC or what ever, you can actually lose at the hearing and have to fix everything you were suppose to have working anyway and not get the rent while things aren’t working.

    So the best way to keep your rent coming in is to make sure all tenant issues are dealt with properly and you keep the renters happy. There is almost no amount of Security Deposit you can get to cover really awful renters.

    In many states the renters have more rights than the owners.

    When I read about these PE groups buying massively into SFR I thought to myself that the only possibility that they could make any money would be on a recovery of the RE market and selling them at the top. BUT selling a beat up home with problems usually doesn’t get top dollar.. AND if the recession everyone is talking about should happen does, then these guys are going to get hammered.

    If they are losing money now with the highest prices for rentals ever, this doesn’t look like they will come out so well. Even with cheap money, cost can easily eat up profits..

    Another mal investment that the geniuses who are running our world thought would pay off big.. This is what we get when people who have never done a real days work in their lives and never lived in the world most of us live in, have no clue as to the “What IFs” that can happen.

    • Petunia
      Jan 7, 2017 at 6:25 pm

      Can you image what happens when a hurricane hits a city like Tampa or Miami where they own tens of thousands of homes. It will be a nightmare for them. Can’t wait to see it.

      • Niko
        Jan 9, 2017 at 2:45 pm

        :) :) :) :)

    • Cyrus
      Jan 7, 2017 at 8:07 pm

      Your posts are always informative; keep them coming :).

      I don’t think plan A for these guys is not to keep the asset, but make their money, and pass the toxic asset to the public just as they did in 2008. They are in it to make millions and billions fast, and leave naive investors holding the bag.

      • Cyrus
        Jan 7, 2017 at 8:09 pm

        Correction: “plan A for these guys is to keep”

      • Niko
        Jan 9, 2017 at 2:46 pm

        :) :) :)

    • Meme Imfurst
      Jan 9, 2017 at 8:52 am

      From day one, the idea was to create an IPO. None of they companies really wanted to get into the rental business. Their aim was clearly to unload the ‘investment’ to pension funds and the like. Blackstone got near free money from Deutche Bank ( who got it from the FED) at the same time they planned an IPO for the property company to be handled by the Bank. One hand washing the other.

      Americans never seem to band together to stop being screwed.

      • Niko
        Jan 9, 2017 at 2:47 pm

        :) :) :) :) :)

  9. michael engel
    Jan 7, 2017 at 5:55 pm

    Is it current Atlanta eviction filings or, accumulated filings since 2008 crisis?. There is a huge difference.
    No matter what, in the next recession, the number will rise again
    and many units will be badly damaged & abandoned. New Detroits in those co’s throats. They are stuck with bad assets.
    Their business model is defective, to begin with, according to Sam Zell :
    cannot manage them !!
    And that is why they became PUBLIC CO’S.

    • Jan 7, 2017 at 6:29 pm

      The study focused on current filings, which in this case means 2015 and forward.

      • Chicken
        Jan 7, 2017 at 7:47 pm

        At least we’re observing huge wage inflation in the nick of time, just when these slumlords need to increase their rental fees.

        • frederick
          Jan 8, 2017 at 7:35 am

          Sarcasm Chicken

  10. Noz Cavan
    Jan 7, 2017 at 6:01 pm

    Serious destruction of family and homes started with Federal Reserve [1913] with the help of 1929′ crash and pending Dust Bowl. Orchestrated by wealthy 10% at the beginning of 1900’s, wealthy bought up all the corruption, one hundred seventeen years of poison in the government,
    local, state and federal. the Voters must cleanses the country of this scum.

    • Frederick
      Jan 8, 2017 at 7:38 am

      From what I’ve been reading online that day is fast approaching Noz Cavan You can only push the people so far you know

    • Kent
      Jan 8, 2017 at 8:25 am

      That would mean the population having an epiphany and voting out incumbent politicians, getting a constitutional amendment to end corporate lobbying, and re-implementing the post Great Depression regulations over the financial sector.

      Does anyone think any, much less all, of these things would ever happen?

  11. Angry Renter
    Jan 7, 2017 at 6:21 pm

    This Wall street rental scam is just another fed.gov delay tactic to keep housing prices from correcting toward real household income. Best thing about houses is they’re highly combustible and torching them is cheap.

  12. memento mori
    Jan 7, 2017 at 6:30 pm

    I own rental buildings and manage them in a way I like to think is efficient, yet my cap rates on them are 3 to 6%.
    I always wondered how those big guys buying foreclosures at prices it didnt make sense to me, would ever make any money renting them out.
    Now I know it, the plan was to securitize them, pay the rating agencies to rate the said securities AAA and sell them to the unsuspected buyer while paying themselves huge bonuses and salaries in the process.
    Welcome to rip off capitalism american style!

    • AlbieOk
      Jan 7, 2017 at 6:51 pm

      Same as it ever was!

    • chris Hauser
      Jan 8, 2017 at 4:05 pm

      there is no requirement to buy the issued securities.

      but it is as good a time as any to sell them. their portfolio is tilted better than the others, but the structure favors the seller, not the buyer.

      it’s not an even trade.

      repeat first sentence.

  13. d
    Jan 7, 2017 at 7:43 pm

    Corporate single family homes do not make enough to cover overheads and pay a dividend. So the people who set up these entity’s have another angle.

    Or they have been very badly advised.

    Administration entity’s, that do not make money, do not pay well, so do not employ, nice, efficient, effective, people. The emphasis from the top down, is get the money, and don’t spend any of it.

    Hence the poor maintenance, bad customer relations, and high % eviction notices.

    The people who set up and hived off these REIT Corporations are the ones and probably only ones who will make money in this deal cycle. Until these REIT entity’s come up for sale in Chapter 11/7. When the major shareholders who set them up, will take them back, for pennies in the dollar, less their debts.

    Just another long term, American, legalised, CORPORATE FRAUD.

    • Frederick
      Jan 8, 2017 at 7:41 am

      The majority of these structures are rubbish anyway and with little or poor maintanence they will NOT fare very well long term I’m a builder and I know very well

  14. anthony hall
    Jan 7, 2017 at 8:03 pm

    These Wall Street Scrooges are the same Scum let off the MERS Robosigning Foreclosure Scam.

  15. Chicken
    Jan 7, 2017 at 8:07 pm

    ““There is increasing documentation of an ensuing high rate of evictions in U.S. cities, partly due to tenants’ inability to afford higher rents.””

    Well wage inflation has reared it’s head in the nick of time it seems.

    They don’t perform maintenance and repairs, tenants are hard on houses. They expect the landowner to hire a maintenance crew but tenants don’t want to pay for that service.

    Pretty soon property taxes will begin increasing due to counties are being squeezed by unfunded pensions, and about everything, etc., and that additional expense must be passed on to tenants too, someone has to pay for it.

    So yeah, if these landlords/investors are taking a financial hit they will exit.

    • Chicken
      Jan 7, 2017 at 8:11 pm

      Yet the Pentagon spends $1T/yr producing military armament and raining bombs down on civilians.

      • Dan Romig
        Jan 8, 2017 at 7:12 am

        According to an analysis of Pentagon data by the Council on Foreign Relations, “The U.S. dropped 26,171 bombs in 2016 conflicts.” As reported by Teresa Welsh of Tribune News Service.

        24,187 of these 2016 bomb drops were on Iraq and Syria. The first being from lies about WMD, and the second is from a “Civil War” which the United States has entered into.

        Thank you President Obama. In 2015, the U.S. only dropped 23,144 bombs on civilians. Way to pick up the pace of destruction on Planet Earth Mr. President!

        • Edward E
          Jan 8, 2017 at 7:16 pm

          Whistle blowers and possibly some deplorable journalists would be getting bombed too if swamp woman with the Hard Choices doctrine had become POTUS. Lockheed Martin, Boeing, Raytheon, Northrop Grumman, General Dynamics and United Technologies call that revenue.

    • Cyrus
      Jan 7, 2017 at 8:15 pm

      Wage inflation of 2-3% is not going to pay for rent; for average worker earning around $50K that translates to $1000-$1500. That’s not even one month rent in most big cities.

      • d
        Jan 7, 2017 at 8:21 pm

        Those 50K workers didn’t get any increases.

        The 2% was not across the board, it was the cost of the minimum wage increase legislation, spread across the board.

        Ie the total wage bill went up, by that amount, but the increase was only in 1 sector, most unusually, the bottom.

        • Cyrus
          Jan 7, 2017 at 9:35 pm

          Thanks for pointing that out; I hadn’t read the details.

      • Chicken
        Jan 7, 2017 at 11:17 pm

        Then perhaps we can say wage inflation is like a fart in a windstorm?

      • Frederick
        Jan 8, 2017 at 7:43 am

        Especially when energy costs start to spike It’s a disaster waiting to happen

    • Petunia
      Jan 8, 2017 at 2:30 pm

      You just reminded me that before we left our mega landlord rental, we got some notice that the costs of repairs, deemed to be the renter’s fault, would be passed on to renters. They get to decide what costs to pass on. This is a giant ripoff and needs legislation to curb it. Maybe this is part of the reason people are not able to pay the rent.

      Our rental needed to have the front and backyard sodded, the pool resurfaced, the house tented for termites, and all the bottom kitchen cabinets replaced due to a flood(caused by a bad repair). This wasn’t even all the repairs, and it still needed work.

      The renters of these properties need to start demanding protection from all these predatory practices. Vote them all out because they are letting all this happen.

    • chris hauser
      Jan 8, 2017 at 4:09 pm

      i have some houses where property taxes and insurance, necessities, you know……. eat 3 months rent.

      sole saving grace is low basis and proper gearing.

      we have met the enemy, and it is us.

  16. Greatful again
    Jan 7, 2017 at 8:54 pm

    Are these losses on paper or actual cash flow.? At any rate, the real killing us probably going to be made selling the shares. The rise in assets (the houses) is going to make the real value look very good.

  17. Willy2
    Jan 8, 2017 at 1:37 am

    – How many times does one Wolf Richter keep propagating this myth that ZIRP is a policy implemented by the FED ?? NIRP (in Europe) is a central bank policy, ZIRP isn’t !!! ZIRP is a policy implemented by a person called Mr. Market. It the market that determines rates not the FED (how much W. Richter likes to believe that)
    – The story tells it all. The reason for high demand for rentals is that a lot of families want to rent and no longer want to own a home. Eviction of a renter that can’t pay the rent allows to rent the home out to someone who is able to pay a higher rent.
    – Do these listed companies pay a dividend ? I assume they do. If then that’s the only thing that holding up these real estate companies.

    • Jan 8, 2017 at 1:57 am

      Item by item:

      1. Good grief!

      2. Yes, as the article said, homeownership rates are at 5-decade low; lots of people want to rent. But read the details and motivations for evictions, as described in the article. This might explain why Colony’s eviction rate = 32%.

      3. No they don’t pay a dividend.

      • Cyrus
        Jan 8, 2017 at 9:57 am

        I haven’t seen Mr. Market for a long time around here. Have you Wolf?

      • chris hauser
        Jan 8, 2017 at 4:10 pm

        one imagines their rental universe is titled to the credit challenged.

        one wonders who the fees get charged to.

    • Cyrus
      Jan 8, 2017 at 9:59 am

      If you see Mr. Market, say Hello to him, and tell him we miss him around here.

      • Chicken
        Jan 9, 2017 at 10:28 am

        Mr. Market pays 0.75% on reserves as an incentive to not lend. Mr. Market shoveled out a lot of QE to rescue over leveraged gamblers (weak hands) looking to turn a profit. Gamblers running bucket shops don’t come cheap, employment and careers come cheap. Besides, someone has to pay for their Hamptons parties and cocaine habit.

    • MarkinSF
      Jan 8, 2017 at 2:09 pm

      Please explain exactly how the market sets interest rates? And then google FED & Interest rates and see how crazy that statement is.

    • Markar
      Jan 9, 2017 at 11:27 am

      Good lord, you are misguided if you think Mr. Market sets interest rates. Ever heard of interest rate swaps and QE? That is your alleged Mr. Market, and yes, the Fed is behind it.

  18. michael engel
    Jan 8, 2017 at 2:28 am

    Before the start of a new recession, a landlord who choose to
    sell in a very good housing market, – though slightly beyond
    peak, – might do the following :
    – increase rent to the max, so the tenant will teach him a lesson and leave on his own will. He will empty the unit.
    – stop service & maintenance in order to frustrate the tenant.
    – clear the most sellable & desirable units by termination of the
    lease first and evicting the easiest to evict, if necessary.
    Squeeze as much juice as possible by :
    – cutting overhead.
    – increase management fees & distributions.
    – declare a small loss.
    Sell as many units as you can and turn them into cash : cash in !
    That’s is why landlords rent rate increase minus the rate of
    wage increase is at maximum level, because the landlord is in
    a hurry to act fast, to clear and sell, before he is stuck with them
    for decades.

  19. Jim Smith
    Jan 8, 2017 at 5:10 am

    I have rented homes before and it is a different ballgame than other forms of assets.
    The amount of labor and attention required from each home/tenant in order to produce a profit from tax benefits, price appreciation, and pay down of the mortgage is substantial and beneficial in a normal or healthy market.

    The minute the rates turn (and they have) and home prices follow down these guys have better be out the back door with their securitized loans because the last one standing when the music stops is going bankrupt.

    Also, when this does happen their selling is going to exacaberate an already over leveraged, over priced-relative to incomes, market and with the stronger dollar foreign buyers will be on the next ship out of town.
    Watch out below folks as this is will be just another chapter in the book “how the Fed destroyed the American economy by misprinting risk to bail out their friends in NY”

    • Frederick
      Jan 8, 2017 at 7:46 am

      Exactly Jim My sentiments precisely It could get ugly very fast

      • Bob
        Jan 8, 2017 at 4:31 pm

        OK so where do you guys have your money? There’s no honest market anywhere anymore so what do you do? I’ve foolishly been in cash most of the last decade or more when not in gold/silver, just waiting for this ponzi scheme to end (market, housing, etc.), but it seems as though I’m the ignorant one waiting around for true price discovery to reappear when everyone else appears to be getting ahead by indiscriminately buying up assets at any price.

        Given I agree with your sentiments, where do you guys try and store your wealth?

        • JZ
          Jan 8, 2017 at 7:05 pm

          Same as you. Cash is being inflated away and precious metals as a savings instrument is killed as well which I have been really happy about.

          I value freedom more than consumption and the pleasure of having more yield than neighbors.

          I would rather be the one making his own food as opposed being served by the FED like a turkey without any idea of when thanks giving will come. (Nasim Teleb)

          For the sake of this threat, I think there is nothing wrong to evict people. It is a legal contract people sigh and agree at their own free will and each party should furfill its obligations. When either party is NOT happy, just break the contract.

          Back in 2006, people take on debt to buy houses they can NOT afford, thinking if the ponzi goes on, I make money and if the ponzi goes bad, I walk without any significant down payment. Bank will die, I will be evicted. Later on, bank gets bailed out, and those people nowadays gets evicted.
          It took 10 years to play out by all kinds of money manipulations, but this should be an expected result given the sin committed 10 years ago. I had to say bankers did NOT get what they deserved. Avery joe did get what he deserve, NOT what he wanted.

        • economicminor
          Jan 8, 2017 at 10:08 pm

          Makes me wonder why the percent of evictions is so high. A contract is a contract and the renters have to fulfill their part but so does the landlord. In many states, the laws covering how the landlord conducts his business are pretty onerous.

          Some people seem to ignore the reason there are so many renters. The fraudulent lending which caused so many to lose their homes also put most of these people outside the rules to repurchase. They couldn’t qualify for a loan and they have to live some where.

          The other side of this is that when the Banksters and these super funded special access landlord entities bought all these directly from the government, that took them out of the market.. You do know about supply and demand.

          So when the supply is limited due to insider trading, the lack of supply causes prices to go up. This was a plan by the Banksters and their friends who got special access. It made everyone’s books look better as this drove up asset values.

          These new landlords it seems to me plan to package these new businesses up and sell them as IPOs to the pension funds again. This way the PE groups and the Banksters are made whole and the risk is passed along to the public again. Wash rinse and spin… AGAIN.

          And those running these Pension Funds aren’t dealing with their own money, it is OPM so they are looking for pretend returns with the cover that every other pension fund is doing it.. So in the end the pension funds go broke and the government entity that are the recipients just raise our taxes to cover the losses..

          And all those involved in this fiduciary fraud as every one knows or should know yet they get to go home with big salaries and even bonuses and the public takes it in the shorts again..

          Sounds like a good plan to me.

        • JZ
          Jan 8, 2017 at 10:23 pm

          economicminor, i agree with everything you said. But nobody was forced to take out those fraudulent loans that will destroy both banks and borrowers. The end result should be pretty clear, somebody will live on the street. I guess those who participated must be thinking it does not have to be me, it is the sucker who hold the bag at the end of the ponzi. The bankers were thinking clearly. they knew when people finally get evicted, they will get bailouts. All i am saying is that I have no sympathy for those who participated in the greedy ponzi and got burned. I do have sympathy for those who did not participate but get into this mess of inflated rents and high prices.

        • economicminor
          Jan 8, 2017 at 11:34 pm

          A lot of people who got trapped in the ponzi housing scheme really had no idea that it was a ponzi propagated by the Banksters. People want to believe, especially if they think they are gaining by it. When most people and news talked positively about the gains, it was really hard for many to not participate.

          The worst part of all this is that the little guys got to pay the price, some twice in the high price of rents and others in the NEW high price of housing due to the shortages created, while those who perpetrated the scams got to keep their ill gotten gains and some even got bonuses.

        • JZ
          Jan 9, 2017 at 12:04 pm

          economicminor, I agree with you again on the fact that when banks are promising you money, it is very difficult to resist. It is ALWAYS difficult to resist when you can avoid earn your living by transferring wealth from other people in your hands. That’s why there is lottery, that’s why there is casino.
          If these people leant anything from the wealth transfer game, where were they when washington is doing bailouts and deficit spendings? where were they when the central banks drive rate to zero, and inflate asset prices? They did not learn anything and all thy are thinking is how should I transfer those money into my own hands.

    • chris Hauser
      Jan 8, 2017 at 4:13 pm

      the cost of empire is financed one way or the other.

      there is definitely some reordering of alliances and interests going on.

      border adjustments, indeed.

  20. Vernon Hamilton
    Jan 8, 2017 at 10:42 am

    “The effect of evictions is “housing instability or insecurity”:

    Families with insecure or unstable housing may move frequently, suffer eviction, or otherwise be at increased risk of homelessness…”

    Say also, people without fixed residence are not going to be able to vote –
    Another method of disenfranchisement of urban poor folks.

  21. Mel
    Jan 8, 2017 at 10:54 am

    In the face of an IPO, evictions make sense (other people seem to have touched on this too.) New investors may ask “Why is your rental income so low?” You can say something like “There are a lot of deadbeats, and we’re in the process of pushing them out. If you buy now, then you’ll own the stock when the deadbeats are replaced by good renters, and the value of your shares is going to soar!”

  22. interesting
    Jan 8, 2017 at 10:35 pm

    “It bought them out of foreclosure”

    AT MASSIVE DISCOUNTS THAT IF OFFERED TO THE CURRENT OWNER WOULD HAVE PREVENTED THE FORECLOSURE.

    what a game.

  23. Chicken
    Jan 9, 2017 at 10:45 am

    “Some people seem to ignore the reason there are so many renters.”

    My guess is this is a denial mechanism. By claiming it’s better to rent as an excuse for being unable to own a home makes it acceptable.

    If the world wasn’t a financial whack-a-mole game, the rate of home ownership would be much higher and the benefit would be stable families taking responsibility for their livelihood as opposed to a room mate revolving door.

    Anymore, it’s as if you can’t own a home unless a liar loan is involved.

    • Petunia
      Jan 9, 2017 at 1:46 pm

      Owning is not a practical choice anymore because employment is not stable for most people.

      • economicminor
        Jan 10, 2017 at 1:04 pm

        “Owning is not a practical choice anymore because employment is not stable for most people.”

        Unless you live below your means and are flexible.. I chose to live where I do and not move because moving is expensive. That meant my wife I have had to be creative in making money. But the most important part was living below our means and having a good cushion so that we could weather the changes.

        I also built and rebuilt most of what I have and still do. I just had an oven microwave convection combo have the display die from a power spike. I spent a week investigating it.. No replacement parts available. Found a guy in Oklahoma that would rebuild the controller but in talking to him he talked me thru checking out the transformer and eventually found a fuse on the board that was blown. So I thanked him for his help and took the board out took it to a TV repair place that replaced the fuse and just saved myself about $3000.

        It isn’t that I am a trained electronics expert. It is all about cost benefit analysis. What will make the most sense. Just calling some one to come and after a $100 service call they can’t get the parts or just going out and purchasing a new $2500-4000 unit that might only last until the warranty is up or spending some time figuring out what the problem is and attempting to fix it. Worst case is that I have to buy a new one anyway.

        Lazy people should rent.. People who can’t live within or below their means should rent. People who can or won’t fix a faucet or a toilet should rent. People who think they are smart yet have no idea how to fix or repair anything should rent… Lots of people should rent.. Yet for the rest of us, there are lots of advantages to ownership like we don’t ever have to move and spend all that money in moving costs. We know our neighbors and are part of a community. When you are somewhere long enough, you can actually own then life becomes much easier.. Moving around or renting will never bring a person to the peace and contentment that ownership does.

        • Petunia
          Jan 11, 2017 at 1:15 pm

          I hope you never get sick under medicare because all your property will be gone. So much for living below your means.

        • economicminor
          Jan 11, 2017 at 3:43 pm

          I have what I believe is adequate supplemental insurance.. A decent bank account and pretty decent income. I feel very fortunate that I married a wife that is not only very conservative (in the old context) but was also in the medical field. We are as well as can be for our age, genetics and injuries from a life of doing.

          None of us get out of here alive! I plan to at least do my golden years in some comfort. I am hoping to continue traveling for the next decade then just gardening, preserving food and exercising until I kick the bucket … No guarantees but we did the Plan a long time ago. And didn’t drink the Kool Aid. If the math doesn’t work or the risk to high, don’t do it. Ever read Steven Covey’s book First Things First? Good help to think thru how to get from A to Z.

  24. TheDona
    Jan 9, 2017 at 11:07 am

    Another factor to consider is the high and getting higher cost of utilities. If folks are moving from an apartment to a house the utilities can be a real surprise and bust the budget very quickly. If they lived in a newer home and moving into a older one there are lots of hidden water and energy suckers.

    Cost of water/sewage in Atlanta is second highest in the Nation.

    http://www.cbs46.com/story/31122998/high-water-bills-could-go-higher-for-atlanta-residents

    They also have a 52.5% higher cost of natural gas than the National average.

    I moved from a new home that was twice the size of the older home I live in now but all of my utilities were double in my smaller home. It was shocking and also unaffordable. Had to replace all of the windows, the sprinkler system,re-set the commodes (surprise leak under the carpet…yuk) to get them back down. A landlord doesn’t care how much your utilities are!

    Also have you noticed all of the additional user fees, taxes etc on all of your bills? Reminds me of the frog in the pot of cold water. Heat up slowly and the frog doesn’t notice…until its boiled. A lot of families are reaching the boiled point.

    • Petunia
      Jan 9, 2017 at 1:51 pm

      Your statement about people reaching the boiling point is true. Most people who weren’t affected by the financial crisis don’t realize they have only been lucky. That luck may run out when the instability becomes uncontrollable. We are already seeing it in the crime stats in certain cities, the pension crisis, and the big enchilada – the election.

    • Ethan in Northern VA
      Jan 11, 2017 at 5:13 pm

      When I lived in an apartment in Norfolk VA my utility bill was much much higher than the townhouse I rent now (2x or better the size.) The inefficient old central hvac unit (water to air) and bad thermal properties I suppose drove up utility costs. If I owned a place I would import my own solar panels from China and go that route.

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