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.”
Ninety-six percent of the Blackstone tenants in Los Angeles County, and 85% in Riverside County, were people of color, matching the demographic of the communities Blackstone rented in. Their rents were, buy and large, unaffordable by standards set by the U.S. Department of Housing and Urban Development (HUD).
HUD calculates that rent is unaffordable if it constitutes more than 30% of a tenant’s income. Only one-third of the tenants in L.A. met that standard. Half of them paid between 30% and 50% of their income for rent and 17% paid more than 50%. Riverside was similar. Only 37% had affordable rent and 33% paid more than 50%. The researchers didn’t find a single Riverside tenant with affordable rent whose income was under $50,000.