Monday, July 31, 2017

Your landlord doesn't actually live here

I buy houses

I think these property management mediators are popping up now mostly as a means for large scale investors to park money.  But the business model can rope in a lot of smaller operators as well.  Which is what makes this NYT story scale down to a relatable level. 
Mr. Bahr’s unconventional path to ownership is one that was carved in the aftermath of the 2008 financial crisis. After millions of distressed homes flooded the market across the country, some large institutional investors, like Blackstone, began buying and transforming single-family homes — a symbol of American upward mobility — into rental properties.

While publicly traded companies like American Homes 4 Rent and Colony Starwood Homes are major players in this market, most single-family rental properties are owned by small-time investors, like Mr. Bahr. In 2015, 85 percent of the 17.5 million single-family rental properties in the United States were owned by investors with portfolios of 10 properties or fewer, with 45 percent of those houses owned by investors with only one property, according to the Housing Finance Policy Center at the Urban Institute, a research institution.

Mr. Bahr found his house through a California-based company called HomeUnion, a one-stop shop for small-time investors that helps people buy, renovate and rent properties in 11 markets around the country. HomeUnion charges an acquisition fee of 3.5 percent of the purchase price; management fees of up to 10.5 percent of the rent; and a 10 percent fee for renovations over $2,500.

In exchange, Mr. Bahr can be a landlord at arm’s length. He has never visited his property and does not know the name or occupation of the person who rents it. “Sometimes I wish I was more involved,” he said. “A big part of my savings went into that property, and I feel like I should help out, but they’re doing it all for me.”
So, at the very least, you can see how when the rent is too damn high in New York that drives the rent too damn high in other places as well.  The model is particularly good for any large or small players wanting to get into the short term rental business. At the budget presentation this morning, the mayor is already talking about one way the city is already in on this racket.

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