Billion-Dollar Landlords: Rental home giant once led by Trump ally is under fire from some tenants, critics

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PlayBruce Nicholson and Lisa Daspit
WATCH Billion-Dollar Landlords: Rental home giant under fire

Bruce Nicholson and Lisa Daspit thought they had found the perfect house. They spotted it from the car -- a bright yellow bungalow with white trim, partially hidden from the street by an array of palm trees on the lawn -- while exploring a favorite neighborhood in Margate, Florida, outside Fort Lauderdale. The couple had dreams of owning their own home, and this single-family rental offered both the time to save and the space to grow.

They called the number for Waypoint Homes posted on the sign out front and moved in shortly thereafter, excited to make the house their own.

“It felt cozy. It felt warm,” Lisa said. “It felt like home.”

The first sign of trouble came from above. Less than a year into their lease, Bruce and Lisa say they noticed a crack in the ceiling above their living room. They called Waypoint and left messages, they said, but their requests for maintenance went unanswered. As their frustration grew, they told ABC News, so did the crack – first longer, then wider, until finally the ceiling caved in, scattering debris onto the furniture below.

“There’s problems happening, and I can’t get in touch with anybody,” Bruce said of his landlord. “We’re like this little speck on the bottom of the totem pole that means nothing to them.”

PHOTO: Bruce Nicholson and Lisa Daspit say they notified Waypoint about a crack in their ceiling but the company failed to fix it before the ceiling collapsed into their living room.Courtesy of Bruce Nicholson and Lisa Daspit
Bruce Nicholson and Lisa Daspit say they notified Waypoint about a crack in their ceiling but the company failed to fix it before the ceiling collapsed into their living room.

Bruce and Lisa would soon learn that Starwood Waypoint was in fact a Scottsdale, Arizona-based company that owned tens of thousands of other single-family rental homes throughout the United States, and their landlord was, in effect, a man named Tom Barrack, then the company’s billionaire co-chairman.

A close friend and political ally of President Donald Trump, Barrack directed the company to buy bundles of foreclosed homes after the housing market collapsed in 2008 and rather than reselling them, the company rented them to tenants, a business model Barrack once touted as nothing less than a redefinition of the American Dream.

“It's about continuity of income and a new asset class that in the American Dream will continue to love living at home,” Barrack said in a speech at the University of Chicago in 2012. “Not necessarily owning a home.”

In an interview with ABC News, Aaron Glantz, a senior reporter for Reveal from the Center for Investigative Reporting who has published a series of reports on the home rental business, described the company as “the ultimate, out-of-state, far-removed, absentee landlord” and Barrack as a businessman who prioritizes profits over people.

“Like President Trump, Tom Barrack is a real estate mogul,” Glantz said. “And he’s the kind of real estate mogul who has always made his money by profiting off of other people’s pain.”

PHOTO: Tom Barrack, private equity real estate investor and founder, chairman, and CEO of Colony Capital, at his company offices in downtown Los Angeles, Sept. 29, 2017.The Washington Post/Getty Images
Tom Barrack, private equity real estate investor and founder, chairman, and CEO of Colony Capital, at his company offices in downtown Los Angeles, Sept. 29, 2017.

Barrack has since sold his stake in the company, but the strategy he pioneered continues to spread, as Waypoint finalized its merger with another large company, Invitation Homes, to consolidate ownership of more than 80,000 properties and become the largest owner of single-family rental homes in the country.

With homeownership rates hovering near historic lows and the newly merged company owning a significant share of the middle-income rental market in several large cities, critics say renting from corporate landlords is increasingly becoming the only viable option for thousands of young families who might have once become homeowners.

“The American Dream is to own your own home,” Glantz said. “The American Dream is not to pay rent to a hedge fund.”

ABC News and reporters from ABC stations across the country found dozens of complaints from tenants, however, who say they felt powerless to push back against a company that they say skirted maintenance duties, followed an aggressive eviction policy and showed little compassion to its renters.

In an interview with ABC News, Charles Young, Starwood Waypoint’s chief operating officer, pushed back against the company’s critics. He pointed to the company’s 99.8% customer satisfaction figure, saying the company has local teams that have become part of their communities while the resources of a large company have allowed them to provide quality homes and quality service.

“We’re bringing professionalism, dedicated resources and a lot of energy and desire to service our residents at a high level,” Young said. “And if you look across all of our residents, 99% are having a great experience.”

According to Young, the company was investing in real estate at a time when communities desperately needed financial support.

“They were dilapidated. They were squatters. There weren't people living in these homes,” Young said. “Neighbors would come over to us and thank us because we were helping their property values. We were bringing the neighborhoods back.”

PHOTO: After the merger, the company will own more than 80,000 single-family rental homes in major cities throughout the United States.Illustration by Andrew Van Wickler
After the merger, the company will own more than 80,000 single-family rental homes in major cities throughout the United States.

Bruce and Lisa say their trouble with Waypoint didn’t end with the collapse of their roof. They would also discover what later proved to be mold in their kitchen, which they believe contributed to their young daughter Brielle developing persistent asthma.

“Every morning and every night she has to take a breathing treatment,” Bruce said. “No two-year-old should have to do that.”

Bruce and Lisa are now suing the company, alleging that Waypoint’s failure to address the “toxic mold” in their home resulted in their daughter’s respiratory condition.

Young told ABC News that as the Nicholson case is in litigation, he is limited in what he could say but added the company was always eager to help the family.

“From day one, we’ve been working with the resident to try to resolve the situation,” Young said. “As we look at the situation, we are working with the resident as much as we can.”

Other residents claimed the company put them in more immediate danger.

Carlos and Ebony January outside Dallas told WFAA that their landlord did a poor job of repairing a leak in their rental home, resulting in a stream of water bursting through a light fixture.

“We're just lucky to be alive,” Ebony said. “We'd been telling them for almost two months, that this is a live line that you got water on. And nobody would come out to resolve the issue.”

Waypoint said they tried to send a maintenance crew earlier but due to “extenuating circumstances” they were not able to.

PHOTO: Carlos and Ebony January said a stream of water burst through a light fixture in their rental home after Waypoint did a poor job repairing a water leak.Courtesy of Carlos and Ebony January
Carlos and Ebony January said a stream of water burst through a light fixture in their rental home after Waypoint did a poor job repairing a water leak.

Cathy Cole claims to have had a similar experience. She told KABC in Los Angeles that she was nearly electrocuted in her swimming pool but when she called Waypoint to report the incident it seemed to her that it wasn’t treated as an emergency.

“It didn’t seem urgent to them,” Cole said. “That seems crazy to me.”

Waypoint said they dispatched someone the following day to fix a loose ground wire and Cole gave the company a five-star rating, though she now says the rating wasn’t for Waypoint but for the maintenance man who fixed an unrelated problem with her roof.

They aren’t alone. The Better Business Bureau gave Waypoint a D+ grade, finding “a pattern of complaints” involving “repair and customer service issues.”

“I’m not happy with that,” Young said of the grade. “We’re listening to our residents. We’re working with our residents. … There’s always an opportunity to get better.”

Some tenants, like Susan Strahsmeir of Tampa, even faced eviction after withholding rent to get their problems fixed. She told WFTS that she was told by city inspectors that an improper electrical breaker on her faulty water heater could have led to the house burning down.

“I had to drive by my house every day during lunch to make sure it wasn’t burnt down,” Strahsmeir said.

PHOTO: Waypoints chief operating officer Charles Young pushed back against the companys critics, claiming the vast majority of their tenants are satisfied with their services.ABC News
Waypoint's chief operating officer Charles Young pushed back against the company's critics, claiming the vast majority of their tenants are satisfied with their services.

Waypoint took her to court, and the two sides ultimately reached an agreement in which she avoided eviction and received a $1400 credit.

Young claims that eviction is “always a last resort,” but court records show the lawyer who represented the company against Strahsmeir has handled more than 195 eviction cases in the Tampa area for the corporate landlord this year alone.

The company would not provide ABC News with the number of evictions the company files each year but said in a statement that “notwithstanding our best efforts to work with each and every resident, the eviction rate is about 5%, which we believe is similar to the apartment industry.”

A 2016 study conducted for the Federal Reserve in Atlanta, however, found that an earlier iteration of Barrack’s company, then known as Colony American, “filed eviction notices against a third of its tenants” in a year, sometimes even if rent is only a few days late.

“They’re more likely just to have a policy that says if you’re a day late and a dollar short, we’re going to evict on this timeline,” said Michael Lucas, the deputy director of the Atlanta Volunter Lawyers Foundation and one of the authors of the study.

When tenants are forced to go to court to avoid eviction, they are required to pay additional fees, including the company’s legal costs.

“That’s part of the process we have,” Young said. “It’s part of the business.”

PHOTO: In a lawsuit, Bruce Nicholson (pictured) and Lisa Daspit allege their infant daughter, Brielle (pictured), developed persistent asthma as a result of toxic mold their landlord failed to remedy.ABC News
In a lawsuit, Bruce Nicholson (pictured) and Lisa Daspit allege their infant daughter, Brielle (pictured), developed persistent asthma as a result of "toxic mold" their landlord failed to remedy.

While that business has enriched Barrack, helping him add millions to his bank account when he sold his interest in the company over the summer, it has left Bruce and Lisa’s family reeling.

They refused to move back into their rental home after they said Waypoint failed to address the mold problem, and they say the ordeal has had a lasting impact.

Brielle requires ongoing treatment and constant supervision. The financial strain has forced them to live paycheck to paycheck. And Bruce’s credit is “so shot,” he said, that he “can’t even get a Walmart card.”

They also said they had to leave most of their possessions behind. Only their clothes, they said, escaped the mold, forcing them to start “from scratch.”

So the family’s dream of owning their home feels farther away than ever.

“It’s gonna linger on for quite some time,” Bruce said.

ABC News’ Stephanie Zimmerman, Margaret Katcher, Ayanna Runcie and Amber Reece contributed to this report.

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