Do You Pay Rent To Blackstone: This Is Where Wall Street Is America's Landlord

Tyler Durden's picture

By now it is common knowledge that America's biggest landlord following a Fed-subsidized scramble for distressed and multi-famility proprties over the past 3 years, is none other than Wall Street in general, and Blackstone in particular. Why did the smartest (and soon to be bailed out) people in the room rush to build an army of rental properties in recent years? Aside from the relatively stable cash flows, which as recent years have shown can also be securitized and sold off to greater fools for when they finally go bad, the flow chart below should explain it.

As RealtyTrac further revealed a month ago, four of the largest investors involved in the single family rental market have a potential of $1.2 billion in gained equity, or a 23 percent return, on properties purchased in the last three years (and that is just among the subset of properties with sufficient sales price and valuation information available)... assuming they don't all lilquidate at the same time into a bidless market of course. 

Among the largest institutional investors involved in the single family rental market, Blackstone/Invitation Homes had the most purchases with price and value information available over the past three years with 14,108, followed by American Homes 4 Rent (12,811), Colony American Homes (4,935) and Fundamental REO/Progress Residential (3,208).

Now as a follow up, RealtyTrac has analyzed nearly 10 million sales of single family homes in 2012 to 2014 and the nearly 500,000 among those that sold to institutional investors (entities that bought 10 or more single family homes in a calendar year) to identify where institutional investors have purchased the most single family homes.

The report seeks to identify where the four biggest institutional investors backed by Wall Street and private equity have purchased the most and are most likely to be landlords of single family homes – both at the county level as well as the zip code level. Those top four investors are Invitation Homes (backed by Blackstone), American Homes 4 Rent, Colony American Homes and Fundamental REO.
 
So what did the analysis find? The short answer is in parts of Seattle, Charlotte, Phoenix, Atlanta, Tampa, Cincinnati, Raleigh, N.C., Houston, Denver, Columbus, Ohio, Sarasota-Bradenton, Fla., Raleigh, N.C., Chicago, and Winston-Salem, N.C. Among the 2,490 zip codes nationwide with at least one single family purchase by the top four institutional investors between January 2012 and October 2014, the top 50 zip codes with the highest percentage of purchases by the four largest institutional investors were in those metro areas.

the following heat map shows the percentage of single family homes sold to these institutional investors in each of the 1,804 counties where they purchased properties nationwide in each year from 2012 to 2013.

 

 

Counties with most institutional investor purchases

Counties with the most institutional investor purchases during this time period were Maricopa County, Ariz., in the Phoenix metro area (19,133), Harris County, Texas in the Houston metro area(14,990), Mecklenburg County, N.C., in the Charlotte metro area (8,852), Tarrant County, Texas, in the Dallas metro area (8,387), Wayne County, Mich., in the Detroit metro area (8,153), and Clark County, Nev., in the Las Vegas metro area (7,991).

“The institutional investors kick-started the housing recovery by buying homes in bulk at the lowest point and holding them as rentals,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market. Los Angeles County was among the top 10 for most purchases by institutional investors over the past three years, with 6,152. “As the market continues to climb, we expect these investors to start to sell off their inventory to capture the gains made in the past couple of years.”

Counties with highest percentage of institutional investor purchases

Counties with a population of at least 100,000 and the highest percentage of all single family homes in the county that were purchased by institutional investors between 2012 and 2014 included counties in Atlanta, Charlotte, Shreveport, La., Memphis, Oklahoma City, Dallas, Boise, Macon, Ga., Kansas City, Jacksonville, Fla., Flint, Mich., Houston, Phoenix, Indianapolis and Omaha.

Counties with most purchases by four largest institutional investors

Secondly, we looked at purchases just by entities associated with the four largest institutional investors: Invitation Homes (owned by Blackstone), American Homes 4 Rent, Colony American Homes and Fundamental REO.

The total number of single family homes purchased by the top four institutional investors from January 2012 through October 2014 was 45,747, 0.14 percent of all single family homes in the 234 counties where the top four buyers purchased homes during that same time period.

“Our members represent the largest institutional owners of single family rental homes in the U.S. and their goal is, and has always been, to build a long–term, sustainable industry that professionalizes the traditionally fragmented single family market much the same way the multi–family market was transformed over 30 years ago,” said Matthew Beck, spokesman for the National Rental Home Council. “Our members provide high-quality housing alternatives to families who may not want or be able to purchase a home. Our residents are good neighbors and upstanding members of the community, helping to build stable neighborhoods. Recent studies have shown a growing percentage of renters are families who typically stay in their homes for an average of five years, and we’ve heard from residents that they’re active participants in their communities, sending their children to local schools, getting involved with their HOAs, coaching little league and volunteering with local civic organizations and projects among other engagements.”

Counties with the most purchases by the top four institutional investors were Maricopa County, Ariz., (4,851), Mecklenburg County, N.C., (2,548), Harris County, Texas (1,694), Cook County, Ill. (1,598), Gwinnett County, Ga. (1,496), Pierce County, Wash., (1,227), Clark County, Nev., (1,054), Wake County, N.C. (1,012), Hillsborough County, Fla., (982), and Tarrant County, Texas (980).

Counties with highest share of purchases by four largest institutional investors

The top 25 counties with a population of at least 100,000 and the highest percentage of purchases by the four largest institutional investors included counties in Atlanta, Charlotte, Seattle, Chicago, Nashville, Winston-Salem, N.C., Phoenix, Lakeland, Fla., Tampa, Sarasota, Cincinnati, Raleigh, N.C. and Charleston, S.C.

“The moon, sun and stars all aligned for large institutional investors to buy South Florida properties the past few years. Our limited land — squeezed between the everglades and ocean — growing population enticed by a no state income tax, strengthening economy and bargain priced properties that had dropped 50 percent in value, made it a compelling bet that is paying off handsomely for these bold buyers,” said Mike Pappas, CEO and president of the Keyes Company, covering the South Florida market. “The institutional investors positively impacted our market as they gobbled up much of our distressed inventory. With the expanding economy and size of our market their eventual exit will be handled and absorbed reasonably well.”

The average estimated 2014 median household income in these 25 counties was $56,153 compared to national average of $54,948 among all 589 counties with a population of 100,000 or more and sufficient income data. The average fair market rent for a three-bedroom property in these 25 counties was $1,192 in 2014 compared to average $1,203 among all 557 counties nationwide with a population over 100,000 and sufficient rental data. The average median sales price in October 2014 for these 25 counties was $149,168 compared to $193,380 among all 519 counties nationwide with a population over 100,000 and sufficient home price data.

Zip codes with highest share of purchases by four largest institutional investors

Among 2,490 zip codes nationwide with at least one single family purchase by the top four institutional investors between January 2012 and October 2014, the top 50 zip codes with the highest percentage of purchases by the four largest institutional investors were in Seattle, Charlotte, Phoenix, Atlanta, Tampa, Cincinnati, Raleigh, N.C., Houston, Denver, Columbus, Ohio, Sarasota-Bradenton, Fla., Raleigh, N.C., Chicago, and Winston-Salem, N.C.

“We have certainly seen an impact from institutional investors in the Colorado market. Real estate is based on supply and demand, and with the strong influx of institutional investors we have seen the lower-end market and mid-market have a substantially higher spike in value from the increased competition than would have been experienced without investors coming into the market,” said Greg Smith, owner/broker at RE/MAX Alliance, covering the Denver market. “Most recently we have seen a slowdown in investors in the market place, which should open up some opportunities for the more traditional buyer.”

The average estimated 2014 median household income for these 50 zip codes was $55,882 while the average fair market rent for three-bedroom in 2014 in these 50 zip codes was $1,344.

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Soul Glow's picture

The Fed will buy these bonds too and own every house in the US.  

Creepy A. Cracker's picture

Then Dear Leader Obama will give them to the junior college students who take him up on his "free" two years of junior college tuition.  Free government stuff for everyone who votes properly!!!!!

Bangin7GramRocks's picture

Wish we had capitalism......

Id fight Gandhi's picture

Speaking of which, to those follow NYC real estate....

What ever happened in the fall out of Stuyvesant Peter cooper village? Stuff was going down hard 5 years ago with the rent controls being dropped and them expecting to squeeze out tenants and double, triple rents.

Kinda dropped from the headlines.

BKbroiler's picture

Worst. Deal. in History.  Tishman Speyer got raped with lawsuits for illegally destabilizing units, after buying at the absolute peak of the bubble, then defaulted.  Our colloquial term for Stuytown is the "luxury projects", but the new owners are still getting 3500/month for a 1 bedroom. so there's that.

http://streeteasy.com/building/peter-cooper-village/02a

Uber Vandal's picture

Capitalism has made it this way.

Old-fashioned fascism will take it away

The Beautiful People..... Marilyn Manson.

DetectiveStern's picture

The mainstream have made it so that saying you want to end central banks classes you as a communist.

 

The elites are scared shitless of giving back money creation to the people to allow real capitalism.

Tegrat's picture

Hey I own rentals in these areas too! Look where the taxpayer-funded corporations are buying. Location, Location, Location!

neidermeyer's picture

Tegrat ,

Right about LOCATION LOCATION LOCATION

Blackstone will own Tampa/St. Pete because they have an advantage in that they don't have "mortgages" and therefore there is no security lien to protect with flood insurance , the investors are naked on that front... Blackstone has an easy $5,000+ a year advantage over others in the market because they aren't forced to buy flood insurance (rates went up BIGTIME in the last year)...

Wait What's picture

I've counted 80 new units in development, some 40% with ocean views, here in SoCal this week alone. my only complaint is that some of those units are supposed to be 'Affordable Housing,' which will attract riff-raff section 8 fuckers we don't want around here. time to recruit some of my more liberal, 'save the earth' college classmates to prevent the lower classes from ruining a good thing. at least they know how upper-middle class folks are supposed to live, even if they can't afford to do it while 'saving the earth.'

Handful of Dust's picture

Wait until these tenants wise up and stop paying.

Thirtyseven's picture

Just wait until Tyrone and Shaniqua steal the pipes and wiring out of them.  Equity?  Lol.

RaceToTheBottom's picture

WS will dump them to serfs before the going gets bad.

Belly up to the bar, serfs

29.5's picture

In a way, the bubble chart basically chronicles the migration of assholes to the south. 

Karaio's picture

Usocapião!

There is a way to acquire property.

Is part of customary law and is linked to the Roman law where most of Western legislation originates.

Here in Brazil if you are in possession of more than four and a half in rural areas or to twenty years occupying a property in an urban area you can request the domain.

This does not apply if they are areas of the State or public areas.

Areas of the state are not Usucapíveis!

Unless the State (municipalities, state or federal government) give the document and the area in donation or sale.

If I am not mistaken in the US had a registry Torrens where to demarcate their land and were allowed a maximum by them "X" years had regularized documentation.

I helped in the Master's Thesis of my sister in law in this area.

Most of the time you need to defend your land with lead.

Another thing we found is that, in most cases, the holder of the land dies, leaves heirs sell the property and the third generation has just starving.

The third generation is only the title, name, think they are rich and are in fact only stupid pseudo rich with nothing in life.

The only thing we have is the surname (last name).

The fourth generation only takes the name, some get along.

In a family of five brothers in 1870, only one branch of the family (a brother) had 7 children, 42 were cousins in the 1980s!

The large farmhouse 1870 where there was a Polish community (my father was born there) today is a forest reserve of the State.

It was a region with five farms, a major producer of corn, watermelons, purple cabbages the size of the head of an ET much lime and then discovered, uranium!

I learned to hunt these lands today hunting in Brazil is prohibited.

There was capybara, pampas deer, quail much, much armadillo, collared peccaries (wild pigs - you just kill the last of the herd, if you kill the first is hunting).

Neither weapons we have at home.

I swear to you that I really miss that time.

Sorry for the Google translation was only one regret.

: - /

FlSapo's picture

Does your sister also make $10,00.00 a month working from home on a computer? :)

Karaio's picture

Do Not!

My sister works to 22 years with Justice Judges of the State of São Paulo, my brother is bailiff in Santos, both have various specializations in their fields (and lawyers are trained in University of law, could have chosen to pursue law but chose to follow public career).

I even did the University of Right up to half of the fourth year, I'm the only one who did not get diploma in the field.

My father (deceased) was Lawyer from 1962 to 2008!

My mother is Lawyer since 1973, still makes audiences!

On the other hand, am Geographer graduate.

I was something like 12 years in the military, was Professor of Federal University and University Estagual four and a half years I taught in a private school.

Would you like to know more?

:-)

Wait What's picture

karaio, tell you sister there's an American ZHer who'd like to take her on a date.

if she looks anything like the brazilian models you guys are exporting he'd be willing to part with some of his not-that-hard-earned PM's as a dowry.

oi, menina bonita do rio, eu te amo!

Karaio's picture

 

Uai!

Who knows right?

My sister was born in 1964, today is single.

Her passport has more stamp that I have with gray in the temple by the way, she makes a point of showing the five or six passports that has overcome so much traveling.

She reads ZH, does not comment, know that any hesitation the Federal Police are monitoring your home.

The girl gets much have no life.

It is extremely sarcastic in the comments!

I told her to drop everything, have everything to bitch-than-bore.

The shit is that she enjoys it!

Just like me and my younger brother (we are in three).

When my father died two years, decided in a minute and forty seconds what we would do: I took care retirement transfer documentation, my brother took care of the body, my sister took care of Income Tax, we decided to put it all on behalf of my mother .

Our agreement between brothers is this.

When our mother if it is, then we'll talk.

I can tell you that the heritage that my father left serve until my great-grandchildren.

Nothing in stocks, all properties, realized rent (I do not, but I iron in Income Taxes).

Luckily I, my sister and my brother are "Old Souls".

The three of us work, we spoke little, each has his family (I Goias, my brother in Santos, my sister in São Paulo Capital).

Each "per se".

We are not argentários.

We know that our mother spends an insane money with churches and social works, but we know that all this is a product of my father and she succeeded in life.

We as children have no right to hinder (curtailing) her will.

As I said, three of us are independent, which they bequeathed to us was education.

If you have this release and is not Argentario, maybe I send the phone to my sister!

Extramente was sincere in these words.

:-)

dreadnaught's picture

i THINK he was kidding...

USD Long's picture

We negatively amortized some folks...

Karaio's picture

I agree with you!

There are some trolls who do not know right where they are getting into.

They believe that an idiot like my comment, translated from Portuguese into English on Google is disposable.

I am in Brazil, I speak and say things that happen in my back, in my region, I pass first-line impressions of where I am.

:-)

DipshitMiddleClassWhiteKid's picture

its amazing how vast and systemtic the fraud going on this country is.

 

seriously..

Karaio's picture

Yup!

But the country is MINE!

hehe.

PADRAEG's picture

Sorry, that does NOT even qualify as a 'FLOW CHART'

yogibear's picture

Only way to get free markets is for the Federal Reserve to fail and lose control.

The Federal Reserve, ECB and BOJ is the old Soviet Union controlled economy on a global scale.

rbgnr111's picture

A lot of these areas sound like places referenced by some of the places that had offered self directed ira's backed by properties they managed. 

I think a big part of this is how the government pushes people into managed wealth programs with limited choices. and not giving people the ability to invest they way they want.