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Forums > Social Discussion > "Predatory equity" - US Capitalism is alive and kicking!

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FireTom


Stargazer


Total posts: 6650
Posted:Will this make its way to Europe as other greedy strategies of US companies? I am afraid so.



US capitalism has an ugly face and the so called "American Dream" again is turned into the "American Nightmare"...



The full article



 Written by : International Herald Tribune

NEW YORK: Private investment firms have been amassing what may seem like unusual stakes in New York real estate: They have bought hundreds of apartment buildings with thousands of rent-regulated units across the city that produce meager returns.



As regulatory filings and promotional materials show, the companies expect to generate higher returns quickly by increasing rents after existing tenants vacate their units. Their success depends upon far higher vacancy rates than are typical in rent-regulated apartments in New York.



Some residents and tenant advocates say that they began seeing what they consider a pattern of harassment of low-income tenants this year and suspect that it is a result of the new owners' business models.



Tenants have been sued repeatedly for unpaid rent that has already been received by the landlords; they have been sent false notices of rent bills, lease terminations and nonrenewals; and they have been accused of illegal sublets.



Tenants must answer these notices in court, but many have responded by moving out, court documents indicate. When they vacate the apartments, the owners can increase the rents substantially.



"Predatory equity is undermining the best efforts of New York City and state elected officials to slow the loss of affordable housing," said Benjamin Dulchin, deputy director of the Association for Neighborhood and Housing Development, a nonprofit organization. "Both the private equity funders and the lending institutions are aware, or should be aware, that harassment of tenants is taking place as a result of their financial models."





When will they ever learn?



 Written by : IHT

These companies often make clear that raising rents is crucial to their financial goals. On its Web site, Normandy Partners notes "the increased institutional appetite for New York City rent-stabilized housing transactions" and adds: "There is a near-term opportunity to increase cash flow by converting rent-stabilized apartments to market rate as tenants vacate units."



The companies say that they are not harassing tenants and that they are only trying to protect their rights by enforcing legitimate rules governing regulated apartments.





And that's the height of it!


the best smiles are the ones you lead to wink

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Mr Majestik
SILVER Member since Mar 2004

Mr Majestik

coming to a country near you
Location: home of the tiney toothy bear,...

Total posts: 4693
Posted:nasty pasties. thier mums should go have a strong word to them.

"but have you considered there is more to life than your eyelids?"

jointly owned by Fire_Spinning_Angel and Blu_Valley

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ben-ja-men
GOLD Member since Jun 2003

ben-ja-men

just lost .... evil init
Location: Adelaide, Australia

Total posts: 2474
Posted: Written by :FireTom

When will they ever learn?


what do you mean? from reading the article unless they lose a class action lawsuit (which is highly unlikely due to the huuuuuge amounts of money behind them) they are going to make lots of money ....


Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourself, who am I to be brilliant, gorgeous and talented? Who are you NOT to be?

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bluecat


bluecat

geek, level 1
Location: everywhere

Total posts: 5300
Posted:aaaah; ever the entrepreneur, ben hug



ubblol

EDITED_BY: bluecat (1210595738)


Holistic Spinner (I hope)

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Doc Lightning
GOLD Member since May 2001

Doc Lightning

HOP Mad Doctor
Location: San Francisco, CA, USA

Total posts: 13920
Posted:I agree with Ben. The housing market in New York is absurd. And the part that mystifies me is that it doesn't seem to be self-regulating.

I figured that nobody in his right mind would be willing to pay US$3,000/month for a 200 sq ft. (~70 m^2) studio. Apparently, people are willing to snap them up like hotcakes.

Have fun, y'guys. You enjoy your absurd rents that you're somehow willing to pay. Meanwhile, I'm taking that medical training that you financed with your absurd New York State taxes and moving to San Francisco, where the housing market, while expensive, is nothing as absurd as it is in New York.

The beauty of this is that even if a tenant DOES sue, suing your landlord is a spectacularly poor idea. Because then you have to fight with your landlord to fix every single thing. It can make your quality of life horrible.

New York City has such a huge amount of renters in the market that it is a seller's market all the way. With <3% vacancy rates, it has to be that way. I have yet to live in a building with reliable hot water and heat. I currently pay $1,150/mo to live in a 10'x10' (3mx3m) room in a 3br apt.

And there you have it.

I'm out. bye Good riddance, New York City.


-Mike )'(
Certified Mad Doctor and HoP High Priest of Nutella

"A buckuht 'n a hooze!" -Valura

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FireTom


Stargazer


Total posts: 6650
Posted:Which is why the city seems trying to regulate the market. Because they want 'ordinary' people being able to afford... errm maybe only that the cleaners don't come late to work, having to use the A-train every day? wink

The gap between rich and poor gets bigger - strange that the US besides having such a bad economy at the moment is still able to produce the highest number of billionaires... (just ahead of "communist" China ubblol combine this with 200 million legally owned handguns in civilian hands... umm interesting scenario...

So funny (but disgraceful) for the "greatest democracy on earth" --- wait... who said that? Someone was taking over my keyboard? wink


the best smiles are the ones you lead to wink

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ben-ja-men
GOLD Member since Jun 2003

ben-ja-men

just lost .... evil init
Location: Adelaide, Australia

Total posts: 2474
Posted:In essense what they are doing is no different to any other large corporation, they are achieving efficencies through economies of scale. By artificially altering the market to eliminating substitute products (rent regulated units) they are increasing the demand for their premium products.

They arnt doing anything illegal, the morality of their method is questionable, although i would like to hear it from a less sensational source, but still its like argueing that affluent suburbs should also have a set amount of cheap housing available.

To give an example, a friend of mine brought a web design business, he assessed each of the clients in terms of how much time they required and how much money they spent. He then went through and sold the clients that didnt spend enough money to another web designer who was just starting out. Its smart business to work out how to put the resources you have to the most profitable use.

If there isnt sufficent demand for the property they are offering then eventually the venture will be liquidated and the market will find a new equilibrium. If there is enough demand and low income earners move elsewhere then businesses may have to up the wages that they pay to attact people to do lower paid jobs. Eventually the market will self regulate.


Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourself, who am I to be brilliant, gorgeous and talented? Who are you NOT to be?

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FireTom


Stargazer


Total posts: 6650
Posted:As human beings we all want to be happy and free from misery we have learned that the key to happiness is inner peace. The greatest obstacles to inner peace are disturbing emotions such as anger, attachment, fear and suspicion, while love and compassion and a sense of universal responsibility are the sources of peace and happiness. (the Dalai Llama)

Put in this context, "free from misery" means to simply move out of the flat to achieve happiness and inner peace without anger towards the new owners and attachment towards the own home, fear of ending up in the streets and suspicion of "predatory equity", whilst the investment corporations shalt continue to love their revenues and have compassion for their shareholders only - in the sense of capitalism being the source of peace and happiness (in the Bahamas or any other remote location where the mob never reaches).... wink


the best smiles are the ones you lead to wink

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ben-ja-men
GOLD Member since Jun 2003

ben-ja-men

just lost .... evil init
Location: Adelaide, Australia

Total posts: 2474
Posted:from what i have heard about New York it would be quite difficult to free oneself from anger, attachment, fear and suspicion even with cheap rent!



.... really the owners are doing a community service in providing assistence to help the residents break free from the shackles that bind them to their safe rut of suffering, once set free the residents can seek out peace and happyness in an environment that is conducive to such pursuits wink


Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourself, who am I to be brilliant, gorgeous and talented? Who are you NOT to be?

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Pele
BRONZE Member since Dec 2000

Pele

the henna lady
Location: WNY, USA

Total posts: 6193
Posted:In many ways Ben is right.
This is supply and demand, and it is NYC. A city which thrives and feeds on inequity and commerce.
Fair? No.
Moral? Not really.
Legal. Sadly so.

The city itself has been trying to regulate things for years, but because these are "private" transactions, they have a hard time of it. This isn't new by any stretch of the imagination. Trump is a key instigator in this for years now. Since this is a large country, it is balanced out on a national scale, which you don't see when looking at one small location (as NYC is).

This country was founded on inequality, so why should it start now?

As for output of billionaires, that is relative with alot of variables to it. The number of actual billionaires vs. perceived for non-liquid assets is actually quite low.

So, you think that is bad? How about Zombie Debts? It's a growing trend here and one that people have to be wickedly careful of.
Student loans, car loans, etc are sold from one lending firm to another. That's standard. Some companies are actually selling old loans that have been paid off and the new "owners" are putting them back as "active" and "owed", thus putting people effectively in debt and with bad credit while they try to fight it. And fighting it is very hard unless you keep an amazing paper trail.
That would be another one of the amazing ways our economy is on the downslide, because those that are rich would prefer to belittle, demoralize and steal from those who are not.

So yeah, this whole false documentation to screw over the little man, more common than you think.


Pele
Higher, higher burning fire...making music like a choir
"Oooh look! A pub!" -exclaimed after recovering from a stupid fall
"And for the decadence of art, nothing beats a roaring fire." -TMK

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FireTom


Stargazer


Total posts: 6650
Posted:Thanks for these insights into American policies and the apparent resignation upon them...

USA: The land of the greatest democracy on earth. Hang on... *Googles* I'm mistaken... that was Cuba wink


the best smiles are the ones you lead to wink

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