Hey y'all I read the article below. It's a great long read but in case it's too long (it is long!) I summarized it for all of us!
- Since 2017, private-equity backed firms like Greystar have done rapid takeovers of apt. buildings all over the US. Private equity takeovers of housing has led to soaring rents (sometimes +25% in a year), no hot water sometimes, the PE firms not paying for trash pickup (leaving scattered trash everywhere) and reducing security guard patrols.
- Of 35 biggest multifamily apt building owners, now almost HALF of the owners are private equity.
- These PE firms flip these buildings, then unload them for profit. These PE-led apt. housing funds try to return 20% compared 4% for regular real investment trusts. Greystar CEO Bob Faith has bragged about these returns.
- Freddie Mac has enabled these firms, accounting for 85% of biggest apt. bldg. purchases. After Freddie issues the loan, it allows PE firms to jack rent with no tenant protection. Blackstone was also accused of tenant abuse in 2017.
- Biggest PE firms involved have been Greystar, Southern Management, Lone Star, Irvine Co. and Goldman Sachs, Brookfield, & Starwood Capital. Both Goldman & Starwood were implicated in fraud in ANOTHER ProPublica study called “The Bigger Short” on commercial real estate fraud.
- Firms like Blackstone fight regulation; they spent nearly $83 million in California to fight rent control measures, 3x their opponents'.
- This is happening under a housing crunch over the past few years, as many of these firms took advantage of the boost in renters from the 2008 crash, and even more so now during the pandemic.