House with peeling paint and mold

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Renters Accuse Invitation Homes of Poor Maintenance

July 30, 2018

Invitation Homes Inc., an investment company that holds the most single-family homes in the U.S., is being accused by renters of not properly maintaining its units, according to a Reuters investigative report. The accusations include unfixed water leaks, insect infestations, toxic mold, nonfunctioning appliances, and, in some cases, raw sewage soaking into crawl spaces, according to the report. Invitation Homes is the creation of private equity giant Blackstone Group.

Renters claim they’ve filed numerous complaints and work orders for property issues, but they say their requests have been ignored. In one incident, renters say their property had water leaks and an infestation of black widow spiders and water leaks, but when their complaints were not properly handled in a timely manner, the problem grew to include roaches and ants. Invitation Homes told Reuters that it offered the renters $887.30 for maintenance and utility billing issues that were caused by a plumbing leak, plus two weeks’ rent. They called the black widow spiders a “housekeeping issue.”

Tenants have also filed complaints about excessive rent increases and fees, which they say are adding up to hundreds of dollars in extra costs a year. Some tenants filed a proposed class-action lawsuit in the U.S. District Court for Northern California, in which they accused Invitation Homes of “fee stacking.” They allege that the firm charges tenants $95 if their rent is one minute late—even when the delay is caused by the company’s online payment portal. Invitation Homes then files an eviction notice, adding more fees, penalties, and legal costs if the tenant wants to stay in the home.

On July 20, Invitation Homes filed a motion to dismiss the case. The company argued the lawsuit did not substantiate that the company’s fees were “unfair” and that the plaintiff lacked standing to make such claims on behalf of tenants nationwide.

Blackstone, the world’s largest private equity firm, is one of the leaders of Wall Street’s charge into the single-family home rental business. The company, through its Invitation Homes, snatched up properties during the foreclosure crisis and turned them into rentals. Invitation Homes manages 82,000 properties. Many of those homes are three- and four-bedroom entry-level homes in 17 metro areas that are concentrated in the Sun Belt.

Real estate professionals and affordable housing advocates told Reuters they are growing concerned that Wall Street may have overstretched in pushing into the rental market. The rising number of tenant complaints may suggest the company isn’t able to keep up with its growing portfolio.

Invitation Homes says it’s committed to operating in accordance with all federal, state, and local housing laws. Invitation Homes COO Charles Young asserts the company does not skimp on repairs and maintenance to help boost payouts to its investors. “In the consumer business, we know things are not always spot on,” Young told Reuters. “We ultimately are trying to do the right thing by our communities and for our residents to provide the service we can live up to.” He also notes that the company’s investments in renovations and property upkeep have helped foreclosure-ravaged neighborhoods to recover since the Great Recession. He also notes that 70 percent of its tenants renew their leases.