Deanna Hughes is one of roughly 30 tenants who are being forced from their homes at the Anchor Marina in Bethel Island after the county labeled the property a public nuisance, on Sunday, Feb 13, 2022. (Erin Baldassari/KQED)
Getting evicted can hinder a renter's ability to find stable housing for years afterward. And the capacity to evict gives landlords a lot of power over their tenants.
In this episode of Sold Out, we explore when and why landlords decide to evict. We also look at how property ownership has shifted in recent years from largely small “mom and pop” landlords to an increasing number of investors and corporations — and what that means for tenants and our housing system.
ERIN BALDASSARI, HOST: It’s a warm fall day in Antioch, California, and Donna Ridge has spent the morning delivering eviction notices.
ERIN: She’s the property manager for a local landlord, Kevin Davidson, and also one of his tenants. We gather around Donna’s small kitchen table.
(Sounds: Papers being shuffled)
DONNA RIDGE: Oh, you got some three-day-notices.
KEVIN DAVIDSON: Mm-hmm.
ERIN: Kevin owns around 100 apartments spread across 15 buildings in the San Francisco Bay Area. And California’s eviction moratorium had just expired about a month earlier.
(Sounds: The reporter, Erin, is talking to Donna and Kevin in person)
ERIN: How many do you have?
KEVIN: Total? I don't know. I have three here.
DONNA: Can't count that high.
KEVIN: You got three, right?
MOLLY SOLOMON, HOST: Kevin says that during the pandemic, about a third of his tenants stopped paying rent at one point or another.
DONNA: Some of these tenants are really good tenants. They didn't deliberately get behind, but when they did, I mean, bills still have to be paid, you know?
MOLLY: Most tenants who fell behind received rent relief. But for some, it didn’t cover everything they owed.
KEVIN: They gotta start paying. Once rent relief has paid up their part, then they gotta pay their part and if they don’t pay, then …
DONNA: They get noticed.
KEVIN: They get a notice.
ERIN: Each tenant was struggling for a different reason. One guy told Donna he gave his rent money to his roommate, the leaseholder. But the leaseholder wasn’t paying rent.
DONNA: That’s not my problem. My problem is that you need to pay your rent, and you need to pay it on time like everybody else does. You know? That's the way it works.
MOLLY: Another tenant stopped paying rent at the beginning of the pandemic. And while the state had given her the maximum amount of rent relief, she still owed more.
KEVIN: Now this woman here, we'll probably have to end up evicting her.
MOLLY: Donna says the tenant had just started going back to work. But then her son ended up in the hospital. Understandably difficult, but by this point Donna had been trying to get her rent money for a year and a half.
DONNA: She's got excuse after excuse. Basically, I think she bit off more than she could chew, is what it is. Now she says she doesn't want to move at all, and I said, "Well, then you better start paying rent."
ERIN: With the eviction notices delivered, Kevin has a decision to make. He could work out a deal and maybe come up with a payment plan so his tenants could catch up on missed rent. Or he could file an eviction lawsuit.
If he does file a lawsuit, his tenant could have as little as five days to find a new place to live — no easy task with rents that just keep rising.
KEVIN: It's really a tight rental market right now, so these guys would be smart to pay their rent.
(Sold Out theme song begins.)
MOLLY: All landlords have the power to evict. But they don’t all wield that power in the same way.
We’ve learned it depends a lot on whothe landlord is — and that’schanging. Large corporations are scooping up more rental properties, and as they do, their relationship with tenants becomes less personal and more profit-driven.
I’m Molly Solomon.
ERIN: And I’m Erin Baldassari.
From KQED, you’re listening to Sold Out: Rethinking Housing in America. This season, we’re talking about evictions.
Coming up: The business of being a landlord — and when it pays to evict.
(Sold Out theme song ends.)
ERIN: To understand how landlords make decisions about evictions, it helps to know why they got into the business. When I asked Kevin, he said he sort of fell into it. He started working as a property manager to help pay his way through college.
(Sounds: Highways, cars driving nearby, street sounds)
KEVIN: So I kind of learned the business a little bit, and I saw the people that were the owners and they seem to be doing pretty good. So I figure that, you know, long term, this would be a good thing to do.
MOLLY: He bought his first rental property — a single-family home — around 40 years ago, while still holding down a day job at an oil refinery. A few years later, he bought a triplex.
KEVIN: And I had just gone from there. What happens is property goes up, you refinance it, buy another. Two properties go up, you refinance it and buy another.
MOLLY: Now, he doesn’t need a day job. And he’s not what you’d call a mom-and-pop landlord. He’s bigger than that — more of a mid-sized investor.
KEVIN: For the most part, my main investment is real estate.
KEVIN: And it's done well.
ERIN: Yeah. (Erin laughs.)
KEVIN: Yes, it's done well.
ERIN: It’s not all profit, though. He says the maintenance, mortgages, property taxes and insurance cost about 65 to 70% of what he gets in rent. The rest he keeps.
KEVIN: So your profit margin’s somewhere around 30, 35%.
MOLLY: Most of Kevin’s properties are on the eastern edge of the Bay Area. They’re in low-income neighborhoods. Even if it seems counterintuitive, he says that’s where you get a bigger bang for your buck.
And studies back that up. Researchers from Princeton and MIT found that on average, landlords in low-income neighborhoods took homedouble the profit, compared to landlords in wealthy neighborhoods.
That’s because they have lower mortgages and property taxes. And despite living in worse neighborhoods, tenants pay about the same in rent.
ERIN: But Kevin’s business model of specializing in low-income neighborhoods doesn’t always work out — for him or his tenants.
He co-owns an RV park and marina in Bethel Island, a small town more than an hour’s drive from San Francisco. County officials there have labeled it a public nuisance. Officials say it was never properly permitted to begin with — even though people had been living there before Kevin and his business partner bought the place back in 2004.
MOLLY: The county and the owners reached a stalemate over how to bring the place up to code. So in November, the owners told the 30-or-so tenants they had to leave. But most had nowhere to go. They stayed and saw bad conditions get worse.
The electricity was cut off in late January, shared bathrooms boarded up and trash service stopped. A few weeks later, a fire broke out in one of the RVs, sending a woman to the hospital with severe burns. She had been using a propane heater to stay warm.
ERIN: The rents there are about as cheap as they get in the Bay Area, with people paying around $400 to $750 a month.
Deanna Hughes moved into a houseboat on the marina about a year ago. She says a lot of her neighbors survive on disability checks or social security.
DEANNA HUGHES: This is what they have, you know? Might not be the best place, but it's a home. It's a roof over their head. And where are they going to be when they don't have this, you know? We have enough homeless people in the state of California, I think, without them adding to it.
ERIN: Kevin says he feels bad for the long-term tenants who have lived there for years. But he felt like the situation had just spiraled too far out of control. And, he and his partner are now in the process of selling the property. But first, they have to get everyone out.
MOLLY: Kevin typically tries to avoidevictions as much as possible. Because they’re expensive. Each time, he has to pay courts and legal services more than $500 in fees. It can cost even more if he has to hire a lawyer. He might go through that whole process only to end up working out a deal with the tenant at the courthouse.
KEVIN: You know, we don't want them to leave. When they leave, they cost more money than it does if they just pay.
ERIN: I asked Kevin if he ever lowered someone’s rent, given the cost of evictions and turnover.
(Sounds: Highway, cars on the road, air whistling)
KEVIN: Well, I don't really do that much because word gets around. And so if you do it for one person, then you got to start doing it for other people.
MOLLY: Usually, though, if one of his tenants is having trouble coming up with rent, it’s not Kevin they call, it’s his property manager, Donna.
ERIN: I met up with her one day while she was making the rounds at Kevin’s properties. It was 100 degrees outside, and Donna was sweating under the afternoon sun. But she was still out there raking up debris.
Donna does all kinds of odd jobs for Kevin. On this particular day, there was a duck — a dead duck.
DONNA: A dead duck? Oh, well, then let’s get that cleaned up then. Who would do that? That's disgusting.
ERIN: She says there’s always something. As Donna repaired a fence, tenants driving by slowed down to wave or call out a quick hello. Others walked over to chat.
(Sounds: A drill being operated, highway sounds, wind whistling)
TENANT SPEAKING TO DONNA: Annabele, she’s starting to stand up by herself now.
DONNA: Oh, no, not already!
TENANT: So, she’s going to start walking.
ERIN: For Donna, being friendly with the tenants is easy.
DONNA: And a lot of them say, you know, you're so great to work with. They're all, because you understand things, because I'm a tenant, too.
MOLLY: In exchange for her work as property manager, Kevin pays Donna’s utility bills. He also bought the big white truck she drives around when she does maintenance on the properties. Those visits have another benefit, though — they help her keep tabs on folks who are behind on rent.
DONNA: You have your rent? You have your rent? She better have the rent. She owes last month's, too. But see, we were working with her.
JILLIAN: I have it all. Just about.
DONNA: Good girl.
JILLIAN: I'll be there.
DONNA: Get it all, girl. See ya later.
ERIN: Donna’s the buffer between Kevin and his tenants. She talks with them, tries to get a sense for why they’re behind, and she can help plead their case to Kevin.
DONNA: Well, they'll call me, and then I'll call him. And he'll either say, OK, that's OK. Or, yeah, we'll wait. Or he won't.
ERIN: I asked Kevin how he felt about serving evictions, knowing that an eviction judgment on your record makes it really hard to find another place to live.
KEVIN: Well, I don't like it. That's why I talk to them. That's why I try to set up payment plans. That's why we give them every opportunity to pay. But if they don't, then they can't live there for free. So we go through with the eviction.
MOLLY: Kevin’s approach to evictions is pretty common. Philip Garboden researches landlord behavior at the University of Hawaii.
PHILIP GARBODEN: Sometimes I feel like the sort of public discussion of eviction assumes that landlords love evicting tenants, right? But almost every landlord we talked to felt that actually evicting a tenant was a business failure and a significant business cost.
MOLLY: Most landlords who start the eviction process don’t actually follow through. In a review of over 150,000 eviction notices in Baltimore, just under 5% resulted in a court-ordered eviction where a tenant was forced out.
Phillip says even if tenants do end up staying, most landlords see real benefits from filing that first notice. Because it helps them collect rent.
PHILIP: The goal of the eviction is to — what one landlord called the "first shot over the bow" — to show that tenant that if they don't pay, there’s going to be severe consequences and those consequences are going to be backed up by the legal system. And those consequences will be lasting.
ERIN: And there are other benefits for landlords.
PHILIP: Many of our landlords explained to us that by filing, they recognize that a tenant is less likely to complain about property issues, right? Is much less likely to, you know, report a landlord.
ERIN: When you owe someone money, it changes your relationship. You’re probably going to try to avoid them as much as possible. And if that person is your landlord, there’s an added layer of anxiety because your housing’s on the line.
PHILIP: And now all of a sudden you have a relationship where in order for that family to stay stably housed, they need to pay back their debt to a landlord. And the way that we treat people to whom we owe money is a fundamentally different social relationship, has fundamentally different power dynamics, than the way we treat people who we buy or rent things from.
MOLLY: Philip says eviction notices help landlords flex their power over their tenants. But that power imbalance is established much earlier, during the tenant-screening process.
PHILIP: Landlords have all the power to sort of give access to families or to deny access to families.
MOLLY: In Kevin’s case, that screening process starts with Donna. She’s in charge of posting his apartments on Craigslist and sorting through applications.
DONNA: We ask that they make double the rent, and they have the means to be able to support their children, like if the emergency happened, if they fell and broke an arm or leg or whatever, that they could handle that and the rent still, you know?
ERIN: She says there’s one red flag they always look for.
DONNA: Mainly, no evictions.
ERIN: They make a few exceptions but most of the time, they pass. Because whatever the reason, it could happen again, and they don’t want to take that chance.
MOLLY: Philip says that’s the way a lot of landlords operate. And it makes sense: They want tenants who will pay rent on time. All this to say, if you have past evictions, a low income, bad credit, or kids, it can be very hard to find a landlord willing to rent you a home.
PHILIP: That becomes much more of this relationship of, you're applying for admission, right? And the fewer resources, the lower income, the more income volatility that a particular family experiences, the stronger that power dynamic is.
ERIN: This power imbalance between landlords and tenants, it’s nothing new. But in some cases, it’s growing.
Coming up: What to expect when your landlord is a corporation.
(Sounds: Game pieces being thrown onto a game board, shuffling of objects)
ERIKA KELLY, EDITOR: So everybody gets how much money? $1,500? I can’t remember what we start with.
ERIN: I can’t remember what we start with.
MOLLY: Oh, wow, I didn’t even know we started with that much. (Molly laughs.)
ERIKA: Yeah, you gotta be able to pay rent, you gotta be able to buy stuff.
MOLLY: That’s our editor, Erika Kelly. We all got together the other day for a game we all played as kids. You can probably guess what it is.
MONOPOLY COMMERCIAL CIRCA 1981: To make it big, you’ve got to play the game. I’m Monopoly Game.
ERIN: For everyone who’s played Monopoly, you know the point of the game: Buy up all the properties and get as rich as possible.
ERIKA: Yeah, you want to bankrupt everybody else. If you don’t buy stuff, there’s no way to make money.
It was pretty clear who was dominating the game.
MOLLY: There’s not even even any $100 bills left in here.
ERIN: I know, because Erika has them all.
ERIKA: They are all over here.
(All three players laugh.)
MOLLY: But this version of the game we all know, that’s not the way the game was intendedto be played.
The original concept came from a woman named Lizzie Magie. Her version of the game came out in 1903, a time when a lot of people really struggled to pay rent. And she wanted the game to be a cautionary tale. Not to glorify capitalism, but steer people awayfrom it. She called it: The Landlord’s Game.
ERIN: In Magie’s version of the game, there were two ways to play: the version we know today, and one where everyone shared the profit. In real life, there are also different ways for landlords to play. Some just want a steady income. But increasingly, others are out to own the whole board.
MOLLY: Up until the late ‘80s, the vast majority of landlords owned fewer than five units — you know, mom and pops. That began to change as more midsized players, like Kevin, got into the game. And corporationsbegan buying more and more apartment buildings. Companies now own at least two-thirds of all apartment buildings nationwide.
ERIN: And it's not just apartments. According to the Census Bureau, nearly3 million single-family homes are now owned by LLCs, LLPs or LPs — shell companies that mask the identity of the true owner. And each one of those houses has a tenant who pays rent.
MOLLY: Neal Dennis III was one of those tenants. He’s a former security guard and a father of seven. In 2015, he and his family moved into a new home in Antioch. Two years later, Neal wasn't getting as many hours at work, and bills began piling up. He and his wife had to make a choice.
NEAL DENNIS III: You know PG&E was going up in the house. Water, garbage, you know, all that adds up so when you're trying to divvy it out to everybody, somebody is going to get cut short sometimes. We need water, we need PG&E. Well, rent is going to be a little short this month.
ERIN: For the first time, Neal was late paying rent. His landlord was Waypoint Homes. At the time, Neal had no idea the company owned more than 23,000 homes across four states. When he fell behind, no one offered to get him on a payment plan. Instead …
NEAL: I think they filed within a week.
ERIN: After not paying?
NEAL: After not paying.
ERIN: Wow, that’s so quick.
NEAL: You know, it was quick.
ERIN: Did anyone call you ahead of time?
NEAL: No, we just got a letter in the mail, you know, and a letter on the door.
ERIN: Neal couldn’t afford a lawyer who might’ve worked out a deal. So, he and his wife agreed to pay the back rent, and then packed up to leave.
MOLLY: We tried to track down Waypoint for comment, but the company no longer exists.
Just a few months after Neal and his family were evicted, it was swallowed up in a string of consolidations by larger and larger players, eventually merging with Invitation Homes — the country’s largest owner of single-family rentals. Today, they own more than 81,000 across 12 states.
ERIN: Their rapid growth is emblematic of a big shift towards corporate landlords. Millions of families lost their homes to foreclosure during the 2008 housing bust. And many of them became renters. New corporate landlords took advantage of dirt-cheap prices, buying up homes by the thousands.
Desiree Fields is a professor of geography and urban studies at the University of California in Berkeley.
DESIREE FIELDS: And it is this huge loss of wealth at the household level that is what enables these players to get their start. So there's something important there, right? This, like, very direct transfer of wealth from Main Street to Wall Street.
ERIN: Invitation Homes was founded in 2012 by Blackstone — one of the biggest private equity firms in the world. Invitation Homes CEO Dallas Tanner recently told the podcast RealWealth the fact that the company owns so many homes is a good thing.
DALLAS TANNER ON REALWEALTH SHOW: We can drive down the costs because of our economies of scale in terms of how we, you know, fit and finish your home, offer upgraded standards within a home, whether it's kitchens, countertops, master bathrooms, whatever. And the law of large numbers really helps us create a better product at a more affordable price.
MOLLY: Those cost savings don’t appear to be passed on to tenants. Instead, they go to investors as profits. Invitation Homes increased rents last year by an average of 9%.
That translated into more than $260 million in profits paid out to shareholders.The company capitalized on increased demand for single-family rentals during the pandemic. And they continued to buy up more homes, even amid sky-high prices.
DESIREE: They can kind of outcompete would-be-owner occupiers. And that, in turn, just kind of shunts people back into the rental market and increases demand for essentially the products the invitation homes is renting out.
ERIN: Despite its financial success, the company has recently come under fire, and a big part of that has to do with evictions.
MOLLY: Invitation Homes wouldn’t agree to a recorded interview, but they said in a statement they’ve been trying to work with tenants during the pandemic, even signing up hundreds for rent relief.
But when it comes to its eviction practices, Invitation Homes isn’t that different from other big corporations. Studies have shown corporate landlords are more likely to evict than smaller landlords, even two to three times more likely, according to one study out of Princeton.
Again, here’s University of Hawaii researcher Philip Garboden.
PHILIP: There's big differences in how landlords do eviction, based on who that landlord is. The large corporate entities are much more likely to file quickly and a lot.
ERIN: Philip says that’s partly because those decisions are standardized. And they’re not made by property managers like Donna. Notices go out automatically. It’s a process that doesn’t usually leave tenants much leeway to work out a deal.
PHILIP: Warnings go out on the fifth of the month to all tenants who are late. Then by the seventh or ninth of the month there's an official filing process.
ERIN: Corporate landlords are under extreme pressure to increase their profits. And Desiree Fields says they have other kinds of demands.
DESIREE: They have imperatives to pay dividends to, you know, to their investors, to shareholders. They have large amounts of debt that they need to pay down.
MOLLY: Corporate landlords typically charge more fees for things like late rent, pets, pest control and parking. And while smaller landlords typically cover maintenance, corporate landlords are increasingly sticking tenants with those bills.
DESIREE: So we see them increasing rents, but we also see them in general trying to squeeze the asset any way they can. So we see things like piling on lots of extra fees as a way of generating revenue.
ERIN: After Neal Dennis III and his family were evicted, they did end up finding another place to live. It’s a small blue house with white trim, not far from where they were before. They’re coming up on five years in the house. And this time, Neal’s home is owned by a small landlord who lives in the area. He says the interactions are a lot more forgiving.
NEAL: Look, if I'm going to be late, I’ll give him a call let him know, "Hey, I need until this time." "No problem." "I'll have it in your account at this certain time." "No problem." Never no notice on my door.
MOLLY: In a lot of ways, what small landlords are looking for in tenants is pretty similar to what tenants want from their landlords: stability. Most have day jobs. They manage the properties themselves, and they don’t want a lot of extra work. So they tend to charge their tenants less, because they want to hold onto them and reduce turnover.
DESIREE: They're looking for, you know, their rent checks to flow in as a supplement to their income.
ERIN: But there are downsides to having a smaller landlord. Philip Garboden says a closer personal relationship with tenants can also lead to more friction.
PHILIP: When they feel a tenant is hiding from them or when they feel for whatever reason a tenant isn't trying their hardest to pay the rent, things can go south in a hurry sort of emotionally.
ERIN: And that can influence their decision to evict.
PHILIP: Small owners can be so frustrated that maybe they will go and execute an eviction, even if it's not profitable for them.
ERIN: There’s also evidence that small landlords tend to rely on gut feelings, which can lead to all kinds of discrimination.
PHILIP: So there are trade-offs involved.
MOLLY: But big or small, all landlords hold a lot of power.
DESIREE: So just by virtue of, you know, having the resources to, you know, to purchase a property and own it, landlords are able to charge tenants for access to something that's a fundamental human need, right?
MOLLY: And she says that points to a larger, systemic problem.
DESIREE: We treat housing as a market commodity.
MOLLY: It’s something to be bought and sold, to make money off of.
ERIN: And, Desiree says you can hate certain players, especially the ones who are trying to squeeze every last penny from their tenants. But, it’s the game that’s rigged. Big corporations are just taking it to its logical end, by trying to make the most money possible.
DESIREE: I do think that's incompatible with the idea of having housing that is meaningfully affordable, but also to a system where people feel like they have like some power and control over, like, their basic living conditions and, you know, the kinds of choices they're able to make about their housing.
MOLLY: Owning property has been the main way for middle-class people to build wealth in this country. And, for people who’ve been able to buy into that system, it’s worked really well.