One of the nation’s largest corporate landlords was forced to defend itself on national television today, as part of a scathing new investigation by ABC News that found it was slow to repair its homes and quick to evict.
“We’re bringing professionalism, dedicated resources, and a lot of energy and desire to service our residents at a high level,” Charles Young, chief operating officer of Starwood Waypoint Homes, told ABC’s Brian Ross, claiming a 99 percent satisfaction rate.
But tenants across America told ABC a different story. One Florida couple, Bruce Nicholson and Lisa Daspit, said they complained repeatedly about a small crack in their ceiling until it widened and eventually collapsed. They said their 2-year-old daughter, Brielle, developed persistent asthma because their house was infested with toxic mold.
ABC’s report is the latest probe of Starwood Waypoint, which controls 35,000 homes. Previously called Colony Starwood Homes, it was founded in 2012 by Tom Barrack, one of President Donald Trump’s closest friends. Barrack quit the company in June, a day after a Reveal from The Center for Investigative Reporting exposé detailed deteriorating conditions, rampant evictions and rising rents at the company’s properties.
The Reveal story, headlined “Profiting off pain,” began this way:
One of President Donald Trump’s closest friends and confidants took advantage of the Great Recession to build an unprecedented real estate business that makes him tantamount to a modern-day slumlord – buying up homes, bumping up rents and allowing the properties to fall into disrepair.
Southern California billionaire Thomas J. Barrack is the mastermind behind the scheme, founding a company five years ago that has taken 31,000 single-family homes off the housing market and calling it “the greatest thing I’ve ever done.”
In its corporate filings, the company boasts about the increasing amounts of money it charges in fees and the declining amount it spends on maintenance.
In his interview with ABC’s Ross, Young defended the fees. “It’s part of the business,” he said.
Today, Starwood Waypoint is in the process of merging with another large corporate landlord, Invitation Homes, a Dallas-based company that owns 43,000 homes. It was created by the Blackstone Group, whose chief executive officer, Stephen Schwarzman, also is a close friend of Trump’s.
The merged company would be the largest landlord of single-family homes in America – renting out about 80,000 homes in dozens of cities from Seattle to Miami.
The trend of turning homes into hedge funds, both Reveal and ABC noted, has boxed entry-level homeowners out of the market.
Barrack, 70, is among the winners of the U.S. housing crisis, which washed away the wealth of millions of people. Since 2007, the single-family rental market has added 2 million units, the Census Bureau reports, even as the homeownership rate hit its lowest level since the Vietnam War.
The “explosive growth of the single-family rental market has been a defining characteristic of the housing bust and recovery,” Patrick Simmons, director of strategic planning for the government-controlled mortgage company Fannie Mae, wrote in a report last October.
But Simmons said it’s come at a cost: a “starter-home shortage that now appears to be slowing the return of first-time buyers to the housing market.”
Corporate landlords are more likely to file eviction notices, according to a study in the heart of Colony’s largest market by the Federal Reserve Bank of Atlanta. But that pain was not spread evenly across communities. One factor, Reveal reported, seemed to predict whether a tenant would get an eviction notice: the concentration of African Americans in the neighborhood.
But Young told ABC eviction rates are similar to the industry average, about 5 percent. And he said the company has helped improve rundown communities desperate for financial infusion.
“They were dilapidated. They were squatters. There weren’t people living in these homes,” Young said. “Neighbors would come over to us and thank us because we were helping their property values. We were bringing the neighborhoods back.”