They say home is where the heart is. That is, unless you live in a house owned by a large, faceless corporation that won’t answer your calls when the A/C breaks, the electrical system goes haywire or mold is festering.
Welcome to the new state of homerentership, a way of life in metro Atlanta where residents are increasingly becoming tenants, albeit with fenced back yards where their dogs can roam.
In an ongoing series, The American Dream For Rent, several of my AJC colleagues have documented that tens of thousands of our neighbors live in single-family homes owned by someone else. Often, the landlord is a corporate behemoth hiding behind a labyrinth of vaguely named LLCs.
From July 2021 to June 2022, one in three homes in metro Atlanta was sold to investors. Again, that’s one in three homes, tops in the nation. Or bottom, depending how you look at it. A study by Redfin, a residential real estate brokerage, found the median price of those homes was about $280,000.
“Long the bedrock of family wealth for the middle class, single-family homes have been snatched up in the thousands by private equity firms and publicly traded companies, converted into rental properties and bundled into complex investment vehicles,” said a recent story written by reporter Brian Eason and AJC data whiz John Perry.
That story featured a couple of families renting such homes and the horror stories that happen when residents face the maintenance issues that invariably occur. It used to be you knew your landlord or at least the property manager and could harangue them. Now, you must email a suspect site or call an 800 number that no human answers. The homerenters are learning that getting a response is often like putting your thumb on Jell-O.
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
One such conglomerate is Invitation Homes, which has gobbled up and rents out more than 10,000 homes in metro Atlanta. It doesn’t make it easy to get an answer, listing homes under a maze of corporations, like 2019-1 IH BORROWER, LP or COLFIN AH GEORGIA 5 LLC or IHR PROPERTY GEORGIA LP c/o INVITATION HOMES-TAX DEPT and so on.
The maze of LLCs not only makes it hard for residents having problems to get answers, officials of local governments, to whom those renters often appeal, also run into dead ends. And Georgia state law is ferociously protective of the God-given rights of landlords.
Invitation was created by Blackstone Group, a massive glob of capital looking to devour anything profitable worth gobbling. And places where people must live is a solid bet.
Invitation officials didn’t speak to my colleagues. Instead, they sent a statement saying, “We are very careful not to suggest we offer affordable housing, but we are also very clear that renting is more affordable than buying in many markets.”
Renting is certainly a choice by many, although an increasing large segment of the populations finds it has no choice. One common story these days is that regular folks trying to buy a home are routinely edged out by institutional investors who swoop in and offer cash while they’re fumbling around trying to lock down a mortgage.
But the untold semi-secret is that a lot of these investors are debtors, too. They’re just better at borrowing. And they can get the money for their “cash” at better rates. The AJC story pointed out that one firm, Vinebrook, borrowed $241 million through Freddie Mac, with an adjustable interest rate. Thanks to government-sponsored loans, Uncle Sam is helping the big hitters ace out families.
Credit: J. David Ake
Credit: J. David Ake
“We are in a housing crisis and a lot of the potential homes (for families to buy) are being sucked up by investors,” said Henry County Chairwoman Carlotta Harrell. “They’re picking up housing from the mid-$250s to the mid-$350s. Those houses are all wiped up (from buyers). And then they charge $2,500 for rent. A lot of our school teachers, police officers and county staff cannot afford to live in the county.”
It’s gotten so lucrative that investors are tired of having to make all those annoying calls to buy homes and have gone straight to building subdivisions where all homes are for rent.
Also, areas with a large Black population are targeted by the investing groups. Henry County, whose population is majority Black, has 11 census tracts in the region’s top 20 for investor purchases.
And a study by the National Association of Realtors noted three Georgia counties ― Clayton (44%), Douglas (35%) and Bibb (32%) ― as being national “leaders” where single-family homes were bought by investors in 2021.
Harrell said she noticed the Lake Spivey neighborhood, where she had lived for 25 years, increasingly had homes purchased and then rented out. She figured perhaps 30 to 40%. She wonders how neighborhoods like that will look in 10 years.
“This is nothing against renters but it’s different when you rent,” she said. “It gets more transient; there’s a lot more turnover (when the homes are rented). You’re not building a sense of community.”
But the big time investors are sure building a nest egg.
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