Thomas Barrack is a real estate mogul and President Donald Trump’s good friend. He built a housing empire by swooping in and purchasing foreclosed homes during the recession.
Reveal from the Center for Investigative Reporting investigated Barrack and his empire. They found his profits are based on exploitive rent increases, putting the burden of repairs in the hands of tenants, and turning homes into financial products.
Host Frank Stasio speaks with Aaron Glantz, a senior investigative reporter with Reveal, about his extensive look into how Barrack has made his fortune, and how his real estate deals extended to more than 1,000 homes in North Carolina.
Investigative journalist Aaron Glantz on his initial interest on real estate mogul Thomas Barrack:
I started to wonder - like I’m sure a lot of your listeners are wondering - why is it that if the economy has been in recovery for eight years or so now, why is it that the homeownership rate in American kept going down. And who was it who was benefitting from this? All these houses that used to be owned by people like you and me didn’t just disappear in a poof of smoke. Somebody bought them. So I started to investigate and I found out that one of the big beneficiaries of the Great Recession, the housing bust, the foreclosure mess, was this guy Thomas Barrack who’s a southern California billionaire and a very close friend of Donald Trump.
How Barrack is turning people’s homes into a mass loan:
The rental empire that he built eventually through Colony Starwood Homes – the tenants who live in these properties know it as Waypoint … – eventually has 30,000 homes all over the country, including over a thousand in North Carolina. And what they would do after they would buy the homes, they would bundle them into these giant mortgage-backed securities. In essence taking out a giant loan against the value of thousands of properties at once, and generate even more money so they could buy even more homes.
How Barrack’s housing empire exploits tenants:
The ownership of the homes are actually cut up and sold into tranches to investors who are looking for a good return. The company tracks their rent increases very aggressively, and increases the rent on every year on every tenant, and pushes a lot of the maintenance responsibility for the building onto the tenant when you read the leases. Another thing that we found, as they try to maximize all of the profit that they possibly can out of these properties, is that they're very very quick to file eviction notices. In Fulton County, Georgia in Atlanta, which is one of their biggest markets, the Federal Reserve Bank found that they had filed eviction notices against one third of their tenants.
How Colony Starwood Homes targeted North Carolinians:
This guy and his company have traditionally bought homes out in the suburbs. They saw a great opportunity to amass suburban homes which were foreclosed on in the Great Recession. So in North Carolina in Charlotte and Raleigh, they have bought mostly 2-3 bedroom homes out in the suburbs. They like to target good school districts so that they can charge high rents and they can think that they’ll have high occupancy because that’s where people want to live. And they have targeted North Carolina as an area for growth in their rental empire.