Multifamily veteran Fred Tuomi came out of retirement to lead a new, Dallas-based venture in single-family home rentals. Sean Berry

Business

How A Dallas Company Quietly Became the National Leader in a Unique Real Estate Niche

Invitation Homes has amassed more single-family houses for rent than any other big outfit, including 2,000 homes in Dallas-Fort Worth.

Dallas-based Invitation Homes has become the largest institutional owner of single-family rental houses in the country, including about 2,000 in North Texas. While it’s a niche that’s stayed mostly under the radar, renting out single-family homes became a lucrative new class of investment following the Great Recession.

Hundreds of thousands of houses had been foreclosed upon back then. So giant real estate investment firms saw a chance to snap up houses on the cheap, renovate them, and rent them out to those who wanted to live in single-family homes instead of apartments, but could no longer afford the mortgage.

Invitation, whose February 2017 IPO was the second-biggest of its type in U.S. history, raising a whopping $1.77 billion, knows it’s operating in a somewhat controversial environment. Critics have blasted corporate landlords for steep rent increases, high eviction rates, and fee gouging. But the Dallas company says it doesn’t operate like that.

“If one resident’s not happy, it’s too many,” Ernie Freedman, Invitation’s CFO, told writer Kerry Curry. “But the important thing is to attack the problem and be fair.” Read all about Invitation Homes and how it became the 800-pound gorilla in this niche in the April issue of D CEO, right here.

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Comments

  • Joe Hunter

    Vulture Capitalist

  • Simon LeBlonde

    Renting from Invitation Homes is your worst nightmare!! The homes bought at distress sales often have major defects, structural issues or long-term deferred maintenance, but Invitation Homes only does quick, cosmetic fixes. Problems are hidden or ignored until after move-in. Good luck trying to get repairs! They hire the cheapest contractors and buy the cheapest materials, then rush to get the work done.The end results often look like work done by 10 year olds. Contractors who do work for them get paid very low rates and frequently do not get paid in full or at all, so good contractors quickly learn not to bother working for them. Those that will work for them cut corners and show up at their convenience, if at all. The defective repairs and cheap parts generally break down in short order, necessitating repeated calls for repairs. Tenants are responsible for the costs of repairing and/or replacing appliances. Repairing water damage from broken pipes in our home has taken 3 months so far and isn’t done yet. Carpet and paint are over 10 years old, but they will not update either while a tenant is in place. We were sent rent increases of 20% per year in the last couple of years; after lengthy negotiations we settled at 10% but we’re leaving at the end of our lease. The company has NO interest in tenant retention because they can raise rents more for a new tenant than they can for an existing tenant. This attitude spills over into customer service, which is incompetent when it exists at all. Local/regional offices do not answer phone calls due to the volume of complaints. Tenants must leave messages which management will answer if and when they feel like it. Maintenance requests are handled through a nationwide call center in Chicago and a computerized tracking system that doesn’t work worth a damn. Invitation Homes does not have a bright shiny new business model–they are just slumlords with with better graphics and more lawyers.Invitation Homes reputation on environmental contamination problems is so bad that one of the national TV investigative teams did an entire show on their malfeasance. STAY FAR, FAR AWAY FROM INVITATION HOMES!!!

    • Texas Mom

      I haven’t had that experience. I moved into an Invitation home a year ago.It was in like new condition when we moved in. Any issues have been taken care of promptly. It is in a nice neighborhood and so much better than living in an apartment.

  • Bill Scepkowski

    If one resident unhappy is too much Fred Tuomi, then why is my family living in a hotel after your company negelected our home at least since Irma, and allowed a raccoon latrine to be made in our attic and category 3 Blackwater damage causing mold colony growth? My 3 children aged 5, 2 and 18 mos are all on medication and breathing treatments for prolonged mold exposure and now have to be tested for parasites? How is it that my AC unit has a mold colony of 205k spores per cubic meter living in it? How is it that I was given a can of ZEP odor remover when we complained about this for 4 months now? We have 4 different holes in our roof. All neglected. Gross negligence is how you view you are setting yourself apart? Shame on you. You are predatory and negligent. I sent you emails personally but I suppose a semiconductor engineer is lowly to you. My wife is 9 mos pregnant and our unborn baby can have birth defects Mr. TUOMI! YOU SIR ARE A SLUM LORD AND I INTEND TO MAKE IT MY MISSION TO MAKE IT RIGHT FOR THE THOUSANDS OF PEOPLE YOU AND YOUR COMPANY HAVE ALREADY DONE THE VERY SAME THING TO. ABSENTEE LANDLORD AT ITS BEST.