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Three companies own 19,000 rental houses in Atlanta, GA
- brodouevencode 3y agoWell this seems....shady
- earthwalker99 3y agoCapitalism is defined as a system of relations which prioritizes the right for one to exercise their existing capital to accumulate more of it, above everything else and indefinitely. It's not "shady". It's just capitalism.
- brodouevencode 3y agoI don't begrudge any company investing and expanding their business, but when there are so many LLCs and layers of complexity to get problems resolved (as stated in the article) seems rather like an intentional obfuscation.
- tppiotrowski 3y agoI recently set up a personal LLC and remember reading something about real estate investors making an individual LLC for each property as a way of limiting their liability. If you can't pay one mortgage then you still keep all your other homes. Those LLCs are then managed by another LLC.
- zer00eyz 3y agoIt's also a way to shield yourself from tenant lawsuits. The extent of damages you can seek are the value of the house.
- brodouevencode 3y agoHuh - that makes sense then. I didn't consider the "limited liability" part of it :).
- younshin21 3y ago[dead]
- 0_____0 3y ago"Capitalism is an economic system based on the private ownership of the means of production and their operation for profit." - from Wikipedia, but that's more or less the classic definition. I think there are many potent critiques of a poorly regulated capitalist environment one can make without twisting the definition. Housing is something that has been spectacularly fucked in the US for historical reasons - white flight, zoning, redlining, Reagan-era policies to enrich the white burbs in perpetuity. Most of the policies that are aiding property speculators and mass landlords were intended to help "grandma keep her house," and keep "those kinds of folks" away. Naturally business noticed that this was an insanely good deal for the American homeowner and decided to get in on it, and in a large-business friendly regulatory environment we have a hard time making the case that these companies are doing something wrong.
- dleeftink 3y agoBut what if.. one's existing capital isn't a right to exercise to begin with?
- wildrhythms 3y agoIn a just society, these companies would be dissolved and its leadership imprisoned at least.
- bequanna 3y agoIf a behavior is occurring that is technically legal but the majority believe the behavior is harmful/undesirable we pass laws to stop that behavior. In this case, stopping or slowing this is actually pretty simple: Change the tax code which is currently overly favorable to real estate investors. Specifically: No accelerated depreciation, stretch out the depreciation schedule to 40 years from 27.5, stop allowing 1031 exchanges, eliminate real estate step up tax basis on death, etc.
- narcraft 3y agoDo the majority believe that 3 companies owning 19,000 homes between them in a particular city is harmful/undesirable behavior? Why? There's nothing obviously bad about that fact alone. How many houses are in Atlanta? The possibility that there are hundreds of LLCs shared between these 3 companies seems a bit suspect on the surface, but I could see how they could be simply acquiring smaller companies naturally. Idk how difficult it is or isn't to consolidate smaller LLCs into larger ones, but the implication of the article seems to be that this is a deliberate tactic to limit the amount of money these companies can be sued for in any one given case. Maybe, but would need more details to see that this is clearly what is happening and how much harm it is causing to aggrieved tenants.
- bombcar 3y agoI dare say the majority of renters feel the "rent is too damn high" - I've rarely found someone wishing they could pay more rent for what they're currently in (usually if they can afford more rent they move to something bigger/better). So the missing link is somehow proving the causality between "rents are high" and "3 companies own 19,000 rentals". That may seem obvious but could be very difficult to prove, especially as it may not be correct. Walmart owns 25% of the grocery business in the USA - does anyone really think grocery prices would go down if they divested? (It may still be better for society for them to do so, lowest price is not the only measurement, of course.)
- bitcharmer 3y agoSeems like this is a general and sadly accelerating trend that we don't own anything any more. We don't own the movies or music we pay for, we rent it. We're not allowed to repair our own devices and machines and finally we can't afford a place to live so are stuck in a perpetual rent loop. We truly live in a dystopian reality but we're not revolting because we have been slowly boiled like the proverbial frog. There will be time when the people rise up and it will not be pretty.
- ilikerashers 3y agoDo you know where I can rent a good pitchfork?
- dleeftink 3y agoDon't know about the pitchforks, but one doctor has you covered in the shovel department [0]. [0]: https://youtu.be/zZL5pHmpCG0 https://youtu.be/zZL5pHmpCG0
- em500 3y agoAs noted in the article, one of the three is publicly traded (Invitation Homes, NYSE: INVH), so you can invest easily if you think they're raking it in. (Annualized return over past 5 years was around 8.3% capital gains plus about 1.5%-3% dividend yield.)
- giraffe_lady 3y agoBut my problem with it is not quite "I am not personally benefitting from this" and more along the lines of this should not happen at all.
- toomuchtodo 3y agoIndeed, this is a political problem to solve with statute.
- epistasis 3y agoCan you define the political problem? Who is harmed by this?
- toomuchtodo 3y agoPeople who need housing are harmed. Stronger controls around housing investment is the problem. People will say "build more" but aren't mindful that we're 15-20 years behind building housing, and it'll take years, if not a decade, to catch back up to make housing affordable through increasing supply. Capital can always move faster than the physical world, hence the need for capital controls.
- epistasis 3y agoHow are people who need housing harmed by renting the housing? My best possible understanding is that it helps people that need housing. In particular, these are single family homes, which usually require a 20% down payment in order to have access, unless somebody rents them out. The best schools and public amenities are hidden behind that 20% down payment, excluding those with less wealth. Those with more wealth are still able to rent if they want to, but this option to rent opens up housing to a lot more. Now, if the only people that you care about are those that can afford a 20% down payment, and you want to maximize their ability to exclude people, I could see how this might "hurt" them, if they will only consider housing when there are not renters. But that's an odd definition of "people."
- grecy 3y agoWe wouldn’t let a private company buy all the drinking water or food so they can profit from it, and we shouldn’t let them do it with housing. Only humans should be allowed to own residential property and we should limit how many so there enough to go around, and so they are affordable. Housing can not be simultaneously affordable and a good investment. Clearly, they are doing this because it’s a good investment, which means houses are unaffordable for people who need a place to live.
- dukeyukey 3y agoThese companies own 0.64% of Metro Atlanta homes. Whereas Walmart owns 25% of the US grocery market. What are you worried about here?
- grecy 3y agoI'm worried about the housing crisis that is gripping so many countries where regular people are utterly incapable of buying houses because they're wildly unaffordable and there are not enough. Private companies can profit of commercial real estate. They can profit off manufacturing and consulting. They should not be allowed to profit on thing basic essentials that people in our society need to live when doing so means some people simply miss out. How would you feel if we were at a buffet for every meal and a private company took so much food you and your family got barely scraps, day after day, year after year? That is PRECISELY what we're doing with housing.
- dukeyukey 3y agoWe don't worry about food because we have an abundance of it, maybe not quite at the right ratios but enough that basically nobody starves. So we should do that for housing - build so much of it that pretty much anyone can get a home. The issue is that, not that 3 companies hold a miniscule 0.64% of an area's housing. Build houses. Flood the market with houses.
- grecy 3y ago
- belligeront 3y agoWhat are peoples concerns here? 3 companies owning 11% of the single family homes available for rent in a metro area doesn't seem like a massive concentration of ownership. Some people prefer to rent rather than buy. Some people don't have savings for a down payment. Someone needs to own the houses that these people rent. There are probably economies of scale to managing rental properties (e.g. larger companies can hire full time maintenance staff). Some people prefer to rent from small-time landlords, but those can have there problems too. Is it the maze of LLCs? That does seem problematic.
- estebank 3y ago11% may not sound like a lot, but it is enough to manipulate pricing of the available housing stock.
- epistasis 3y agoIf so then antitrust laws kick in from three different companies colluding on this. However, I'm skeptical of much pricing control. Few other markets have such widely distributed market share. There is some stickiness in that people don't want to move often, but unless there's a major shortage (which would be the true cause of high prices), it's hard for a 5% owner to exert much on the market.
- anonuser123456 3y agoNot when it requires collusion between 3 separate legal entities.
- lotsofpulp 3y agoIf they have so much pricing power, why are their returns less than SP500? Who would want to lose money compared to a risk-less investment where you don’t have to do any work?
- tppiotrowski 3y agoI think there's concern that if you manage to buy 11% then you can keep expanding. We've all seen what happens when a company captures enough market that there are no alternatives left: Netflix, Prime: commercials and limiting devices per household Gmail: no longer unlimited storage as promised OpenAI: still competing so remains to be seen If these companies are being subsidized by investors to capture market those investors will want a return and things will get nasty.
- elevation 3y agoHow many working Americans own shares of those three companies through their retirement portfolios?
- breischl 3y agoSince they're mostly not public, I'd say probably very few. From TFA: > To make things even more complex, many of these large companies are not traded publicly on the stock market, meaning their total number of holdings is not easily available to the public. Because Invitation Homes is publicly traded
- pfgallagher 3y agoSome of the largest investors in private equity REITs are retirement funds.
- em500 3y agoInvitation Homes (NYSE: INVH) is part of S&P500, so I'd say very many (owning a tiny share). Ownership of INVH is overwhelmingly institutional (investment/mutual/retirement funds): https://finance.yahoo.com/quote/INVH/holders https://finance.yahoo.com/quote/INVH/holders
- pydry 3y agoIt's worth bearing in mind when talking about retirement portfolios that the top richest 10% of Americans of 93% of US shares and the top 1% own 54%. Working Americans own the scraps.
- fasthands9 3y agoFor reference this estimate from 2000 (Atlanta has grown a lot since then) estimates there are 1,370,000 housing units in the "ten country" metro Atlanta area. The estimate in this study is that three different companies own a combined 19,000 housing units in the "five county" metro Atlanta area. I realize these aren't 1:1 comparisons, but they are the best I can find. That suggests each company probably owns less than 0.5% of the area housing supply. Open to other estimates, but think they would be pretty close to mine. https://documents.atlantaregional.com/Land%20Use/Reviews/ID457/Chapters%203-4.pdf https://documents.atlantaregional.com/Land%20Use/Reviews/ID4...
- deleted 3y ago[deleted]
- ovi256 3y agoThis market structure is frequent in Germany, where many more people rent than in the US, and they mostly rent from large real estate companies specialized in housing. In Germany it's not controversial at all and this I'm surprised to see the controversy around these corporate landlords in the US.
- nojvek 3y agoThat’s because there are stronger rental laws in Germany I presume. In US, you could be on the street if the landlord changes their mind. Also for a lot of Americans rising housing prices is seen as a way to build wealth.
- freitzkriesler2 3y agoAll it takes is one anti landlord mayor to put them out of business.
- lotsofpulp 3y agoMayors usually do not have that kind of power. There is almost always a city council, akin to a board of directors and CEO, or a congress and president/governor, etc.
- sershe 3y agoSo few? Is it even 1% of total per company? I think we need to work harder to realize economies of scale in housing.
- younshin21 3y ago[dead]