The foreclosure crisis of last decade left a lot of houses on the market for cheap. Big investors, including hedge funds, private equity firms, and large investment firms, bought them up to use as single-family rentals. It turns out that a hedge fund several states away is not a friendly landlord.
The Federal Reserve Bank of Atlanta laid this out in a recent report, discovering that big investors were twice as likely as small landlords to issue eviction notices to their tenants for being behind on rent. (They studied notices, not completed evictions.)
Eviction is relatively cheap in Georgia, and the state doesn’t have the tenant protections that you might find in other cities and states. That makes it clear exactly how eviction-happy institutional landlords can be when eviction takes about a month and costs them a hundred bucks and a trip to court.
That makes future rentals even harder to find for the families who have been evicted, since their records are now branded with a scarlet “E,” and destabilizes the housing market when experts thought that these Big Bank landlords would have the opposite effect.
“My hope was that these private equity firms would provide a new kind of rental housing for people who couldn’t––or didn’t want to––buy during the housing recovery,” the report’s lead author told Bloomberg. That didn’t work out, and instead, the firms’ eagerness to evict and disconnection from tenants as people has caused issues in the market that may spread to other regions.
by Laura Northrup via Consumerist