10 things your landlord won’t tell you | Mt Kisco Real Estate


1. Your real landlord might be Wall Street

The bursting of the housing bubble, and the recession that came with it, have led more Americans to rent rather than own their homes. In the first quarter of this year, 64.8% of American families owned the homes they lived in, the lowest level since 1995—and far from the peak of nearly 69% of households in 2006.

Fewer owners means growing tenant demand for rental property, and that has allowed landlords to raise prices. Apartment rents in the U.S. rose at the fastest pace this year since the Great Recession, according to the property research company Axiometrics, as April occupancy rates reached 94.8%. And for many Americans, the rent is too damn high, at an average of 30% of monthly household income—the highest in 30 years, up from an average of around 25% from 1985 to 2000, according to data from Zillow Z, +0.51%

The housing bubble and its aftermath also created an opportunity for Wall Street, as investment firms used the opportunity to snap up cheap foreclosed homes and build rental empires. Private-equity firms, hedge funds and other institutional investors accounted for nearly 6.5% of single-family home purchases in 2012, according to a recent research note from the Federal Reserve, up from less than 1% in 2004. Read: Apartment rent hikes are slowing — finally.

Those parties now own about 200,000 single family homes nationwide, the investment bank Keefe, Bruyette & Woods estimates. Blackstone Group BX, -1.66% which Bloomberg News estimates is now the largest single-family landlord in the U.S., owns about 43,000 rental homes across the country, from Phoenix to Tampa, through a subsidiary called Invitation Homes

What’s it like when Wall Street is your landlord?

“They handle you beautifully from the door but once you get in the house, all hell breaks out,” says Chanda Mason, who moved into a three-bedroom, two-bath rental from Invitation Homes in Dallas, Ga., outside Atlanta, last July. She says she was greeted by moldy oven racks and a giant crack in the driveway, where her van got stuck each time she tried to drive in or pull out. Mason is one of a vocal group of Invitation Homes tenants who have complained about maintenance. When Mason complained, the corporate offices would “glaze over the situation and get me out of their face,” she says. “When it comes to getting something fixed, good luck. You’re going to have an issue,” she adds, noting that she will not renew her lease when it expires in July.

Invitation Homes spokesman Andrew Gallina says the company takes complaints and requests seriously, and that residents of a sprawling network of houses all hold different expectations. Invitation Homes has 1,600 employees in 35 field offices to handle tenant issues and offers a 24-hour emergency hotline, he says. Tenants can submit maintenance requests online, which enter a database that tracks when calls are put in, the average response and completion time for different types of work and homes’ repair histories. “We’ve invested in state of the art technology, which your average mom and pop landlord will not,” Gallina says.

Still, some commentators worry about whether any entity, high-tech or not, can do a good job managing a big, far-flung portfolio. These investors “may pose risks to local housing markets if investors have difficulties managing such large stocks of rental properties or fail to adequately maintain their homes,” potentially lowering the quality of neighborhoods, or even pushing prices down, the Federal Reserve note says.


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