There's a rich man sleeping on a
golden bed
There's a skeleton choking on a crust of bread
~ The Police ("King of Pain")
There is a housing affordability crisis in the United States, and even though it has been exacerbated in some ways by the surge in
migrants, the true villains in this
story, if you're inclined to think in terms of heroes and
villains, aren't desperate brown people (or blue-city mayors or
the Biden administration); rather, the bad guys are members of
the billionaire class -- people such as "real estate
moguls" Donald Trump and Grant Cardone.
Huge faceless corporate landlords such as Blackstone are also
playing a big part, of course, although there is disagreement about how much (or even
if) they're really to blame for the crisis. In any case it would be a mistake to discount the
culpability of blustering egomaniacs such as Donald Trump and
wealthy Florida Scientologist Grant Cardone, both of whom have a
gift for attracting a large and passionately loyal following.
It's worthy of note that the Stand With Trump sucker fund that Grant and his wife Elena set up to cover Donald
Trump's New York civil fraud fine has now passed the $1 million
milestone, a mere seven days after it was launched. And the money
just keeps pouring in, with no sign of stopping any time soon.
It is quite clear, not only from Elena's overly dramatic missive
on the GoFundMe page but also from scads of other information widely available online, that Grant Cardone feels a special bond with Trump. In
his eyes, the two are both highly successful real estate tycoons
who are only trying to do good things, but are constantly being
oppressed by the government and the legal system and critics and
whatnot. Somebody call the waaaaahmbulance!
I think it's far more accurate to say that what Trump and Cardone
actually have in common, besides ostentatious wealth,
outsized egos, and a gift for the grift, is that they are
completely indifferent to the widespread misery that the US
housing crisis has created, and it could be argued that they are major
contributors to that crisis.
The landlord from hell
Consider Trump, for example. As The New Republic's Kenny
Stancil wrote in a piece appearing on Yahoo! News on February 21,
2024, the very real potential for a return to Trump's housing
policies would be a disaster.
In 2017, ProPublica described the U.S. Department of Housing and Urban Development, or HUD, under Ben Carson as “the perfect distillation of the right’s antipathy to governing.” It was an apt characterization given that Carson repeatedly advocated for harmful budget cuts, sought to triple rents and foist onerous work requirements on the country’s poorest tenants, and impeded fair housing enforcement. Everything he did ran counter to HUD’s mission.
It’s taken years for President Joe Biden's administration to clean up the mess left by Carson, and the 2024 election threatens to undo all of that hard work. But a return to Trumpism threatens more than a mere reversion: The truth is that his wayward administration did not accomplish all the destruction it intended. It’s frightening to contemplate how much more Carson—or someone who shares his reactionary worldview—might pull off if would-be dictator Donald Trump wins a second term...
It's a good article, and hammers home yet
another reason that a second Trump term would be a disater for
America.
Trump also has a long history of being indifferent to
the plights of tenants -- or, to put it
more bluntly and honestly, of being a landlord from hell -- as
this March 2016 piece on CNN.com describes.
There's an episode in Donald Trump's past that shows just how far this billionaire businessman will go to get his way.
It began in 1981. Trump bought a 14-story building on prime real estate facing New York City's Central Park.
His plan was to tear down the building and replace it with luxury condos. But first he needed a small band of rent-stabilized tenants out of there.
To succeed, Trump played rough, according to lawsuits filed by the tenants. Renters said he cut heat and hot water, and he imposed tough building rules. Trump even proposed sheltering homeless people in the building...
...The next move in his real life game of Monopoly came in July 1981, when he bought a hotel and its neighbor, a rent-stabilized building at 100 Central Park South.
Two months later, he applied for a demolition permit to blow it up. Trump fired the building manager and replaced him with Citadel Management. In his book, The Art of the Deal, Trump himself said he chose a company that "specialized in relocating tenants."
Just a few months later, on New Year's Eve, several tenants received identical "lease violation" warning letters. The previous building owner had given renters permission to knock down walls and renovate their apartment units. But Trump was reversing that exception, and renters had only 12 days to rebuild the walls -- or face eviction.
This October 2018 opinion piece in The New York Times. written by tenant lawyer and law professor John Whitlow, describes Trump as "just another crooked New York City landlord."
...Donald Trump is a homegrown creature, a species well known and justifiably loathed by most New Yorkers — the unscrupulous landlord. The rest of the country may be in a constant state of shock when confronted with the tornado of news that whirls around the Trump administration. But tenant advocates know what he is doing. More than a stooge for Vladimir Putin or the embodiment of a disgruntled — and mythical — white working class, Mr. Trump is at his core a landlord, turning a handsome profit while the rest of us live in increasingly precarious conditions.
As a tenant lawyer, I regularly interact with landlords in the city’s housing courts. They make a killing by taking advantage of a rigged system. They extract as much wealth as possible from hard-working people trying to hang on to the places they call home, with little regard for the common good or the social fabric of our city. They take advantage of tax subsidies to renovate old buildings and construct new ones, and they engage in a range of practices, lawful and unlawful, to raise rents above the threshold beyond which tenants lose the protections of rent stabilization. And they regularly discriminate against tenants on the basis of race, language, national origin and immigration status.
The rich man sleeps in his golden bed and tweets on his golden toilet and peddles his garish gold grift-shoes, while the skeletons fight for crusts and crumbs.
Grant
Cardone's contributions to the misery index
Grant Cardone's multibillion-dollar empire is also based on being
a less-than-stellar landlord, as well as on teaching others how
they can do the same by pouring money into his multifamily
residential property investment funds. The more I read about
Grant and his real estate ventures, the more convinced I am that he
and his ilk are very much a part of the problem of soaring rents
and other factors that are lowering the overall standard of
living for too many Americans, and are contributing to a record increase in the number of homeless/unhoused
people in "the richest country in the world."
An August 29, 2023 article on the New Republic
site, headlined, "The Real Estate
Hustle-Culture Con That's Exploiting Investors and Wrecking the
Housing Market," lays it out starkly, focusing on Grant
Cardone's significant contribution to the problem of housing
insecurity.
An ostentatious Louisiana-born salesman with a penchant for down-home relationship advice, Cardone is a practicing Scientologist who casts himself as a plucky opponent to mainstream financial institutions. He rose to fame as a cold-calling guru, building a large online following with videos and courses that promised to reveal the secrets of salesmanship. He subsequently became a fixture on reality TV shows such as Turnaround King and Undercover Billionaire. He now operates a conference circuit that straddles the line between dumbed-down business school and a clumsy revival meeting (Donald Trump was a recent guest speaker). In Cardone’s videos on YouTube and Instagram, he champions a swaggering, somewhat cruel form of hustle culture aimed at a generation struggling to make sense of its economic misfortune.
Over the past few years, Cardone has directed much of his energy toward real estate investment, making use of his raspy charisma and endlessly rising house prices to preach the gospel of passive income. His focus has been on buying up multifamily apartment rental properties to generate sustained rental income and eventual appreciation on the property value.
Crucially, Cardone has been able to make money not just by imparting financial advice but by exploiting his fan base to build a $4 billion residential real estate portfolio. “We are becoming a renter nation,” Cardone explains in a video from 2020. He’s not wrong. But Cardone’s business model relies on increasing rents and squeezing tenants to maintain his debt-laden portfolio...
...The funds that Cardone promotes online are a type of syndicated investment. He asks his followers to invest, pools the capital, uses these proceeds to secure large loans, and then buys up undervalued rental properties on the premise that he can quickly increase the rents. He produces steady returns with the rents (the passive income), and by increasing the amount the building can earn, he’s also able to increase the value of the property itself. Along the way, Cardone takes management fees, acquisition fees, and up to 20 percent of the profits. Cardone has also been accused of quietly buying the properties in advance and then selling them back to the fund at an inflated price.
Of note, the class-action lawsuit against Cardone that was cited
in the New Republic article was dismissed in October
2023, for the second time in two years.
(It had previously been dismissed, then reinstated by an appeals
court.) The plaintiff had disclaimed fraud on Cardone's part, and
ultimately couldn't prove that Cardone deliberately deceived his
investors. Cardone went on YouTube to crow about the dismissal,
slamming media outlets that had had the gall to report negative
news about him and his ventures. He said that of 14,000 investors
in his scheme, the plaintiff was the only one to complain.
Meanwhile, Cardone has been busy spreading his own (blatantly
self-serving) take on the real reason for the housing
crisis in America. In his alternate
reality, it's not at all because of inflated house prices fueled
in large part by greedy corporate investors (renters who for
various reasons are not in the market to buy a house apparently
don't enter into his equation). Instead, he says, the problem
exists mainly because the majority of the homes on the market are
places that buyers simply are not interested in. From a February
21, 2024 piece on the gobankingrates.com site:
“You don’t want to buy most of the homes in America because they’re old,” he said. “It’s your grandmother’s home. It needs new carpet, new kitchen, new air conditioning, heaters.”
Cardone said that many buyers would prefer to buy a smaller home with amenities than an older home that needs to be completely renovated.
“You’re going to be more likely to move into a smaller condo or an apartment and get all the new amenities and a swimming pool and a gym and electronics and smart TVs, and all the cool stuff that people want today,” he said. “Not only do we have a shortage of inventory, we have a shortage of desirable inventory by 10 times.”
Cardone says we mustn't confuse a housing supply crisis with an actual housing crisis.
Cardone explained that while we are in the midst of a housing supply crisis, a possible housing crisis — an overall failure of the housing market — is decades away.
“I don’t think we’re headed for a housing crisis,” he said. “Seventy percent of the loans in America are either paid or they’re below 4%. You have 40% of Americans that have a loan under 3% for the next 28 years. So we don’t have a crisis until the year 2051.”
Oh, well, then, that's okay. Never mind the
folks, both renters and owners, who are steadily being squeezed
out of even marginally acceptable housing, and being pushed
closer to homelessness, due to soaring costs. Never mind the
growing numbers of people for whom that longtime cornerstone of
the American dream, homeownership, is now an impossible dream.
And never mind the glaringly obvious role that corporate
landlordism is playing in the problem. Apparently none of that
can be considered a "housing crisis" by Grant's
definition. So, no worries.
To advance his own business interests, Cardone actively preaches
against homeownership for most Americans (even though he owns several premium properties himself, including his primary residence in Florida, which he
bought for $25 million, and a vacation beach house in Malibu for
which he paid $40 mil). He encourages other people to
rent and to put the money that they would be throwing away on
home maintenance into (his) real estate investments, which just
happen to be multifamily residential properties. Of course this
means that he and his "investors" benefit when rents
keep rising on those rental units. Screw the folks who actually
have to live in those units. From the New Republic article cited above:
Scooping up undervalued middle-class properties has its own impact. Cynthia Laurent, housing coordinator for Florida Rising, a social justice group based out of Orlando, says that the Sun Belt is already dealing with knock-on effects of investment in mid-tier real estate in peripheral urban enclaves and leafy suburbs. “It’s a chain effect. If folks can’t afford to buy homes, then they become renters. If more middle-class folks are now paying rents, the lower-class folks are being priced out of what is already a short-supplied and underdeveloped housing stock.”
Despite Cardone’s insistence that he stays away from depressed areas, Cardone Capital notes the Covid-19 eviction moratorium as an investment risk in its mandatory earnings report for the fund filed during the pandemic. Eviction has become part of how Cardone operates: Cardone Capital finalized the purchase of 10X Las Olas Walk in downtown Fort Lauderdale in December 2021 and got to work quickly, beginning eviction proceedings against seven tenants in the building the following month. Since then, there have been dozens of evictions filed against tenants in the building.
Cardone has tried to evict more than 50 tenants at 10X Riverwalk, another building in Fort Lauderdale, since he purchased it in 2021. Twenty evictions were filed at 10X Boca Raton, and nearly 100 have been lodged at 10X Delray Beach. This dovetails with extensive studies showing how investor-owned rental properties tend to have much higher rates of eviction.
A recent investigation by The Tampa Bay Post also charged that Cardone had been abusing a “workforce housing” scheme and overcharging tenants who are meant to receive affordable, subsidized housing in his building. Instead of passing on the subsidies to the tenants, 10X Wellington Club pocketed the public money provided by the county and claimed subsidies for vacant properties in the building as well.
All things considered, Cardone appears to be the landlord from hell, kinda like Donald Trump.
Residents who live at Cardone’s properties often struggle to get repairs done while suffering steep rent increases. But that seems to be of little concern to Cardone, who insists over and over again that his funds are raising up the video-watching masses by letting them in on the hidden world of real estate profits. “The real estate we are buying has traditionally been available only to the large institutions (such as Blackstone, Vanguard, Fidelity, Fairfield) and out of reach to everyday investors,” Cardone said as part of a promotion effort for one of his latest real estate funds. “I am making extraordinary investments available to the everyday person.”
As indicated in the quote above, a major part of Cardone's shtick has been positioning his real estate fund as an Everyperson's investment opportunity -- a chance to compete with the big guys like Blackstone and Vanguard. But in practice, there's little difference between him and those faceless and soulless giants.
Blackstone, Vanguard, Fidelity, and Fairfield are the lumbering giants of asset management and among the largest private owners of real estate in the U.S. Their size enables them to make incredible returns, swinging property prices, benefiting from economies of scale, tax advantages, lending rates, and complex financial engineering. Cardone benefits from many of these advantages as well. And while many commentators have pointed to the issues that emerge when ownership is concentrated among a few large institutional investors, Cardone’s smaller pooled funds contribute to the same affordability issues that have come out of the decline of affordable housing as rents increase. Housing as an investment category is the issue. And just like the powerful corporate investors, Cardone is intent on raising rents as much as he can and evicting those who can’t pay. For all his posturing, Cardone has spoken openly about his hopes that Blackstone will eventually acquire his real estate portfolio.
Hear that, Grant and Elena? "Housing as an
investment category is the issue." So please, you two, in
the name of all that is decent and good (look those words up if
you're not sure of the meaning), STFU about how oppressed you and
Trump and other predatory real estate moguls are. Rational folks
aren't buying it.
Housing insecurity in the US
is a complex and nuanced issue, and I'm not pretending there are
any easy answers. What does seem clear is that career hucksters like
Donald Trump and Grant Cardone, who are mainly out for themselves and their bottom lines, aren't doing
anything to solve the problem and in fact are making it worse.
