An interesting article in the Atlantic that clearly exposes that the institutional investors are not very good landlords. Do a google search on "When Wall Street Is Your Landlord".

Interesting highlights from the article--

"Between 2011 and 2017, some of the world’s largest private-equity groups and hedge funds, as well as other large investors, spent a combined $36 billion on more than 200,000 homes in ailing markets across the country. In one Atlanta zip code, they bought almost 90 percent of the 7,500 homes sold between January 2011 and June 2012; today, institutional investors own at least one in five single-family rentals in some parts of the metro area, according to Dan Immergluck, a professor at the Urban Studies Institute at Georgia State University. Some of the nation’s hardest-hit housing markets were finally stabilized.

"The investors argued that they could be good landlords—better, in fact, than cash-strapped small-timers. According to Diane Tomb, the executive director of the National Rental Home Council, a trade group established in 2014, single-family rental companies “professionalized” a sector traditionally run by mom-and-pop landlords, bringing with them 24/7 responses to maintenance requests and a deep pool of capital they can spend on homes."

and

"Wall Street analysts and potential shareholders, however, were skeptical. Maintaining thousands of homes of different sizes, ages, and conditions across an entire metro area seemed like a logistical nightmare. “How can you operate and create scale in that situation?” Sam Zell, the billionaire real-estate investor, told CNBC in 2013. “I don’t know how anybody can monitor thousands of houses.” When the new rental companies started offering shares to investors on the public market in late 2012, the response was tepid.

Additional interesting bits--

"On calls with investors, those two companies touted their cost-cutting measures, which often involved pushing responsibilities onto tenants. In 2016, Jack Corrigan, the chief operating officer of American Homes 4 Rent, told investors that the company hoped to reduce spending on repairs, maintenance, and “turn costs”—preparing a home for a new tenant—from $2,500 per home to $1,600. That same year, Colony Starwood cut property-management costs 25 percent from the previous year; one of its money-saving innovations was to use videos and chat software to show tenants how to fix minor problems, so they wouldn’t have to request repair staff for a clogged garbage disposal or a leaking toilet.

"The obligation to repair their own rental wasn’t the only responsibility passed on to tenants. I reviewed one Colony Starwood lease from 2016; it was 34 pages long and specified that tenants were responsible for landscaping, “routine insect control,” replacing air filters in their central air systems once a month, repairing broken glass (regardless of how it was broken), and repairing and maintaining sewer and sink backups. American Homes 4 Rent started levying “trip charges” if maintenance staff were sent out to homes to assist with repairs that the tenants should have performed themselves, David Singelyn, the company CEO, explained at a 2015 investor forum. Some companies began requiring that tenants buy renter’s insurance to cover the property itself, rather than just their belongings, a clause lawyers in some states say is unenforceable."

...Lots of stuff that's not surprising to anyone dealing with a faceless corporation...

"Rene and Erica Valentin’s problems with their rental home began almost immediately. Their pipes would periodically break, sending a stream of water onto their living-room carpet. Sometimes the water would be boiling hot—their kids once stepped in it and burned their feet, they told me. Getting someone to come fix the pipes was always a production. Erica said she would call, or file a complaint online, and it would take days, sometimes weeks, before she received a response. Repair workers would come and replace small sections of broken pipe, but Waypoint never investigated why the problem persisted. They didn’t replace the soggy carpet, either; a faint mildew smell started to permeate the house. The contractors Waypoint sent seemed, to the Valentins, unqualified—one didn’t have a car and had to call his mother to drive him to Home Depot to pick up a part. “You would expect this type of behavior from a one-person landlord who’s a jerk, but a big multimillion-dollar company—how do you treat your tenants like that?” Erica said. “They have the money to fix things.”

I can see the boardroom presentation - "Just rent them out" the guy said. "The checks just come in the mail!"

"The investors argued that they could be good landlords—better, in fact, than cash-strapped small-timers."

Here it comes:

"The contractors Waypoint sent seemed, to the Valentins, unqualified—one didn’t have a car and had to call his mother to drive him to Home Depot to pick up a part."

Yep, they're really taking landlording to the next level...

It's not so much they are institutional , they are simply looking for short term profits. They only want to hold onto these houses until the prices recover then unload them

{{{{{{{{{......... tenants were responsible for landscaping, “routine insect control,” replacing air filters ........ repairing broken glass (regardless of how it was broken), and repairing and maintaining sewer and sink backups. American Homes 4 Rent started levying “trip charges” if maintenance staff were sent ............}}}}}}}}}

I have tenants responsible for "routine insect control"... sometimes it's good, and sometimes they don't care because "we're not going to be here that long anyways."

I used to have tenants responsible for air filters... some of them are reliable, many of them aren't. Now I do it.

My tenants are responsible for keeping the grass short. Anything beyond that--- tree trimming, shrubs, flowers, watering--- is beyond them, and if I care about it, I'd better do it myself.

My tenants are responsible for plumbing repairs, which are not deductible from rent, as a way to hold people accountable for grease down the sink and stuff that gets flushed that shouldn't. But I make it clear to them to give me a call so I can take care of it up front... because a lot of them would rather have an unusable bathroom than spend $75 on a rotoroot. Me taking care of the maintenance and then hashing out their responsibility towards the bill helps keep me from dealing with thousands of dollars worth of damage on the back end...

Yep, and Deanna, you like many certainly give a hoot about your properties and report to your own self/conscience vs reporting the lowest numbers in maintenance costs to a boss who reports to several layers of bosses whose jobs/careers are all on the line if the price isn’t /numbers aren’t right on the pages at the daily/weekly/monthly meeting or in an email, etc.

I was thinking about this some more, and it reminded me of the "rental car" thread. Basically, someone was interested in getting another side biz going, and was thinking about trying a rideshare/car loaning/rental car sort of business.

We were looking at buying a used car last year, and two former fleet cars made it onto our shortlist. One was sold by Enterprise (the car rental place), where they disposed of their rentals. I was surprised at how new the former fleet cars were-- how could they afford to sell them with so few miles, and they were still such relatively new models? The car we were trying to replace was a 2009 model with about 250k miles on it, and we'd still be driving it if it hadn't hit a deer. So it was so weird to see all of these brand new cars that were only a couple of years old, with maybe 20k miles or less on them. But then during the discussions, I realized that was part of their business model. They sell the cars while they're still new enough to fetch a good price, and then replace them with something that's new enough to appeal to customers who are particular about what they drive.

So it does look like the banks really aren't in it for the long haul-- otherwise, they'd have more eyes in place and boots on the ground to take better care of a long-term investment. It really does look like housing was a place to stash money into for a short period of time, and then a few years later, they'll put the houses on the market when prices are back up again and demand is hot-- and get all their money and more.

But the part that they're being shortsighted about is that you can't get a good price on your car a year or two later if you don't change the oil while you own it. So the same thing is true for houses-- if my pipes are breaking, I'd rather spend $5k to get it replumbed and fix the problem for good, rather than spending $x to repair this piece of pipe, and $x for the next piece of pipe, and $x for the next piece of pipe, and now I've got giant holes in my drywall and dust everywhere, and the carpet's ruined, and now there's mold...