Wall Street's Single-Family Home Grab, Phoenix — Part 3

Phoenix - The block of West Chanute Pass that's just east of Manzanita Park, a rare sprawling green space in the desert city of Phoenix, is, prima facie, a pastiche of a neighborhood.

Various blue, tan, red, gray and cream terracotta tiles and shingles reflect the Phoenix sun. Some homes are stucco, some brick, some a hybrid. The lone tall palm tree on the block towers over its younger peers. Cacti emerge from gravel lawns. A 10-by-12-foot patch of artificial turf fronts one home. A wooden owl guards another. A sun and moon look over a third. The street is quiet, save for the steady hiss of a sprinkler and the intermittent singing of birds.

This neighborhood has been pieced together over decades. Each home is unique. But for all the surface individuality, there's a lack thereof when it comes to ownership, particularly on the half of the block closest to the 40-acre Manzanita Park.

Of the 12 homes that make up that western half of the block, six are rentals, and half of those six rentals are owned by Wall Street corporations.

Some driveways on the street are empty, while others are packed with four cars. A pair of tires sits stacked on a gravel lawn, near the sidewalk. A pile of empty Chewy boxes fronts one house.

This is a snapshot of a changing neighborhood, as one homeowner put it.


"It's getting more crowded," said Angel Martinez, who owns a house on the block.

Just how this and other neighborhoods in Phoenix have changed from predominantly owner-occupied single-family homes to a mix of owner-occupied and rentals, with Wall Street owning a sizable share of the latter, is a complex story that's been chronicled in prior articles in Law360's investigative series.

For Phoenix as a whole, roughly 41,000 of the city's 278,000 primary single-family homes are rentals, a 15% rate. Law360's monthslong investigation found that 25 corporations own 0.1% or more of the city's rental homes, with those firms as a whole owning more than 18% of the city's single-family home rental stock.

Several of those 25 corporations own homes on West Chanute Pass.

Security Deposit Woes

Taylor Stinson had lived in several apartments before moving to her rental home on West Chanute Pass in 2019.

She had kept those prior apartments clean during her tenancies, and had cleaned them at the end of the lease terms.

She had always gotten her security deposits back.

When Stinson came across a West Chanute Pass home for rent by Invitation Homes, she started reading online reviews from past Invitation renters.

A common thread emerged.

"When I read the reviews, I saw that people were not getting their full security deposits back," Stinson said. "But I decided to just put down roots and live here."

Stinson has already financially braced for the worst on the deposit front. She doesn't expect to get it back.

"We are committed to ensuring that residents have great experiences in our homes — including throughout the move-out process. Importantly, we offer a pre-move-out visit about 60 days before a resident moves out," an Invitation Homes spokesperson told Law360 in an email. "One of our staff walks the home with the resident and offers tips on how to prepare the home to maximize the security deposit return. We also provide a checklist and online videos to provide guidance on move-out expectations."

Ownership of that house has been particularly lucrative for Invitation, having purchased the 1,210-square-foot property in 2013 for $84,000. The house is now worth roughly $372,000, according to Redfin.

While the security deposit is a concern, not all has been doom and gloom from Stinson's point of view. Her air conditioner fell from the top of a wall in the time she's been in the current house, and Invitation was prompt to repair it.



Few Avenues for Complaints

Unlike some states that have channels through which tenants can lodge complaints against their landlords, Arizona seems to place a premium on tenant and landlord privacy.

The state's housing website leans heavily on terms such as "private transactions" and "private matters" in describing landlord-tenant affairs.

In short, tenants in Phoenix have few avenues available if problems with landlords arise.

"There is currently no state agency that enforces provisions in the [Residential Landlord and Tenant] Act, and because most landlord/tenant relations are private transactions, disputes that arise between landlord and tenants are generally considered private matters," the Arizona Department of Housing's website states.

The department suggests contacting an attorney for guidance on the Residential Landlord and Tenant Act, which was last updated in 2018.

"If a tenant calls the Landlord and Tenant Program with a concern, and it is determined there may be a health and safety violation as defined in the Arizona Residential Landlord and Tenant Act, the landlord tenant counselor may make a referral to the Neighborhood Services Department," Kristin Couturier, senior public information officer for the city of Phoenix, told Law360.

"NSD could then open a case and conduct an interior inspection of the property. If any health and safety violations are found, NSD would then issue a notice of violation outlining the corrective action needed to come into compliance," Couturier added.

Maricopa County's Assessor also maintains a registry of rental properties, intended to help the county and its towns and cities enforce laws against slums and blight. Consequences for failure to register are meted out by localities, the county told Law360.

The city of Phoenix told Law360 that NSD would investigate any complaint regarding an unregistered property – potentially issuing a citation – but does not proactively check registration status.

The Office of the Attorney General's Civil Rights Division, meanwhile, fields complaints from renters who believe their rights under the Federal Fair Housing Act and the Arizona Fair Housing Act have been violated. Arizona Attorney General Mark Brnovich couldn't be reached for comment for this article.

The shortage of channels for complaints to be sent in the city of Phoenix, Maricopa County and the state of Arizona has prompted some tenants to seek help through the Better Business Bureau.

In February, a tenant moved from Dallas into a Phoenix-area home owned by Dallas-based Streetlane, and immediately encountered a host of problems.

"After moving in we realized the heater didn't work … the dishwasher drain was never connected to the drain line resulting in a flooded kitchen floor, the drain pipe for the kitchen sink is missing a seal and nut which results in more dirty water escaping to the floor, the water valve in the laundry room is broken, and a few small other things," the tenant wrote in a BBB complaint on Feb. 15. "We have filed the work orders for everything and have been pretty much ignored since then. No one in the company that we have access to will respond or assist."

Streetlane's BBB response on March 22, more than a month later, indicated that it had completed four work orders at the house since the tenant moved in. The company couldn't be reached for comment for this article.

"The landlord-tenant relationship can become more fraught when there's no communication," said Michael Lucas, executive director of the Atlanta Volunteer Lawyers Foundation. "A repair concern escalates, perhaps unnecessarily. Withholding rent escalates to an eviction. With better, in-person communication, that kind of thing can be headed off, and deescalated. You put all that together and that's one of the reasons you see those issues."

This year, a tenant signed a lease for a four-bedroom Phoenix-area house owned by Invitation Homes, and upon moving in discovered there weren't four bedrooms.

The tenant filed a BBB complaint in late June.

"At the time of application to the property XXXXX W **** St ******** AZ XXXXX, the home was incorrectly listed as a 4-bedroom home as we had just acquired the property and were unaware that the info was entered incorrectly," Invitation Homes wrote in its response, on July 1. "Ms. ****** was quickly transferred to another home that fit her requests of a 4-bedroom."

Another ZIP Code, Another Concern

When Sheenah Becerra moved into an Invitation Homes property on North 84th Avenue nearly five years ago, the home seemed fine.

She wasn't aware of any major problems.

But soon, the cockroaches came.

"We have had issues and problems with roaches, but since we didn't see them or report it the first month that we moved in, they said they could not help us and it was on us to get rid of them," Becerra said. "We have spent at least $1,000 on bug bombings, roach repellent and roach hotels."

As it happened, there was a provision in the lease that said tenants had one month to report such problems, and if Invitation didn't hear about the problem within the first month, the company was off the hook.

"Invitation Homes takes great pride in the service we provide our residents, including prompt responses to all service and maintenance requests," an Invitation Homes spokesperson told Law360. "However, our lease agreements in Phoenix are very clear that residents are responsible for pest control."

Becerra was at the mercy of the language in the lease, and her hands were tied.

So she hired a local exterminator, Greenleaf Pest Control, to come to her home.

But even professionals were unable to solve the problem.

"After receiving their services for a year and establishing a treatment plan, they basically told us that they're nearly impossible to get rid of and that the bugs are inside the walls and we have to put holes in the walls and fumigate in the walls," Becerra said. "I think I would have to have permission to put holes in the walls to do that, however. My husband was worried that they would evict us if that was the case."

"They act like they are helping people, but they are not," Becerra said of Invitation Homes.

Law360's analysis of corporate ownership of single-family homes in Phoenix found that ZIP code 85041, where West Chanute Pass is located, has the most rental homes owned by the group of 25 corporations that each own at least 0.1% of the city's single-family rental stock.


ZIP code 85037, where Becerra lives, is No. 2 on that list.

Becerra recently fell behind on her rent and applied for assistance. She told Invitation Homes her application was being processed.

In September, Invitation Homes left an eviction notice on her door handle, and started charging her $10 a day in late fees.

"Both of those are consistent with what I've seen," Lucas said, of the late fees and the landlord proceeding with the eviction, despite the message that the rental assistance application was pending. "When you have more local decision-making and person-to-person relationships, as a general matter, that's less likely to happen than when you have a multistate real estate firm that owns these rental homes who's necessarily going to have a formulaic policy on when that is initiated."

More Security Deposit Uncertainty

When Lily Chavarria several years ago was getting ready to leave her former rental home in Avondale, a Maricopa County city 18 miles east of Phoenix, she was aware that her security deposit hung in the balance.

She cleaned as much as she could. But in the end, she didn't get the full deposit back, a point that remains a mystery to this day.

"We didn't have carpet, so it couldn't have been that," Chavarria said, as she cycled through possible explanations in her mind and was unable to land on one.

Despite that experience, Chavarria wanted to stay with Invitation Homes, and moved to her current rental home on North 84th Lane, in ZIP code 85037, several years ago. Chavarria said Invitation was prompt in fixing a broken bathroom pipe at her previous rental in Avondale, coming within four hours.

Not all has been smooth sailing at the new Invitation Homes property for Chavarria, who lives 13 miles northwest of the West Chanute Pass neighborhood.

It was hard to open and close the sliding door when she moved in, and she noted that on the move-in form that was returned to Invitation Homes. She said she never "reported it," and the door remains hard to open and close.

Lack of clarity is a common thread among long-distance landlord-tenant relationships, Lucas said.

"When you have [a local landlord], you more often than not have a landlord that knows that the Smiths sometimes get paid in the second week of the month, but are always good for it," Lucas said. "When you have a line of communication that's not just through an app or a third-party management company, you have those conversations — not just from a standpoint of compassion — about why the decisions are being made on the part of the landlord."

And Chavarria has empirical evidence on security deposits with Invitation Homes, having not gotten the deposit back in full from her old Avondale rental, and doesn't expect to get her deposit back this time around, either.

"I don't think I will [get the current deposit back], only because the rooms have carpet … and I have animals. I'm thinking because I have animals, because carpet absorbs smell, sometimes I let my doggies in there," Chavarria said. "It's hard to say. I'm hopeful, because I'm going to do the whole cleaning."


Back on West Chanute Pass, the future of that neighborhood, like the planes climbing out of the Phoenix Sky Harbor International Airport 2 miles to the north, is up in the air.

One block north, West Grenadine Road traces the other half of a horseshoe the two streets combine to form.

Three houses on that West Grenadine Road block have for-sale signs on their lawns.

--Additional reporting by Emma Whitford. Editing by Orlando Lorenzo.

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