This is what happens when a city blocks new housing, and people couldn’t afford it anyway due to sky high mortgage rates.

Photo above: the abandoned Atlanta Constitution newspaper building in downtown Atlanta. Near public transportation and has plenty of parking. Don't ask why this isn't site isn't being converted to affordable housing.

The relationship between FICO score, down payment, and income stability is one of the murkiest equations when setting mortgage rates. If you have pristine credit you might luck out at 5.08% with a hefty down payment (like someone I know who closed on his home this month). If you have a subprime FICO score you will pay double - 10%. If you have been previously evicted – possibly during the coyly named “housing crisis” a decade or so ago - then you probably can’t get approved by a bank at all. Try “Slim and Rudy’s Money Store” between Dollar General and the laundromat.

Normally people locked out of buying a house would resort to apartment living. But suppose the labyrinth of zoning rules, construction permits, groundwater runoff surcharges and bribes to local politicians is just too daunting to break ground on a new apartment complex. What then?

Atlanta is showing us the answer (see link below). Corporations are buying up detached homes that wage slaves with poor credit couldn’t dream of anyway. These corporations are renting to the credit impaired because new apartment construction is taking a time out. 19,000 detached homes are controlled this way in Atlanta by just 3 companies. The largest of which is Invitation Homes (ticker INVH) incorporated in 2017 and listed on the New York Stock Exchange. It controls 7,800 of the 19,000 Atlanta rentals referenced in the link.

Today’s column IS not a recommendation to buy shares in INVH. Nor can I unilaterally declare them to be risky or unable to cover their dividend (3.75%) if economic conditions get worse. I will not subject myself to a libel suit. There are legitimate stock analysists with a variety of opinions on INVH. If being an absentee landlord in the aggregate appeals to you, do your research.

Suffice it to say that this clever corporate home rental thing is unlikely to take off and become the next Nvidia, Bitcoin, or Microsoft. If doubt this, then you should remember the last housing crisis, where homes were acquired at inflated prices and then the owner(s) found themselves under water before too long. That potentially could happen to the corporate home rental thing too.

I’m just sayin’ . . .

Just 3 companies control 19,000 homes in metro Atlanta — why it’s ‘unlike anything we’ve ever seen’ in the US

Horizontal Holdings: Untangling the Networks of Corporate Landlords