Hedge Funds do not Make Good Landlords
Having a Wall Street powerhouse for a landlord can result in lousy living conditions.
Take, for example, the Blackstone Group, one of the world’s largest hedge funds. It decided to get into the rental housing business, buying up at least 40,000 homes, most of which were properties foreclosed in the wake of the financial crisis. The houses were spruced up and then rented out by Blackstone’s property management subsidiary, Invitation Homes. Over the course of nearly two years, the enterprise turned Blackstone into the country’s biggest landlord of single-family homes.
But if a new study is any indication, life in half of the firm’s houses is filled with plumbing and other problems.
Fifty-six percent of Blackstone residents in Los Angeles County reported troubles with their pipes, according to a survey (pdf) of renters in 1,400 Southern California properties owned by the firm. In Riverside County, 38% of respondents complained about having roaches or insects in their homes.
Among all residents surveyed, 46% reported plumbing problems, 39% had roaches or insects, 22% complained of rats, mice or termites, 21% said their heating or air conditioning didn’t work properly, 20% have endured mold, and 18% suffered leaky roofs, among other concerns.
The study, conducted by the Right to the City Alliance’s Homes for All Campaign, also found that only 10% of tenants in Los Angeles and 26% in Riverside had ever met their landlord in person, “which demonstrates the corporate, hands-off approach Invitation Homes seems to take towards property management.”
To Learn More:
Renting from Wall Street: Blackstone’s Invitation Homes in Los Angeles and Riverside (Homes for All Campaign of the Right to the City Alliance) (pdf)
Wall Street Unlocks Profits from Distress with Rental Revolution (by Heather Perlberg and John Gittelsohn, Bloomberg)
Wall Street Set to Cash in again by Buying Bulk Foreclosed Homes and Renting Them Out (by Noel Brinkerhoff, AllGov)
Stephen Schwarzman (AllGov)
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