Second Biggest US Landlord, Owner of 20,000 Homes, Terminates 15% of Staff Following Loss

Steen Jakobsen, chief economist at Saxo bank pinged me with a few comments this morning.

1. The 2nd biggest employer in the US is a TEMP AGENCY –   Kelly Services (with more than 550,000 people working for them in the average year). GE is 3rd largest with 300,000. Wal-Mart is first with over a million employees.

2. American Homes 4 Rent, the 2nd biggest landlord following Blackrock shed 15% of staff following a second quarter loss.

Please consider American Homes 4 Rent Said to Fire Employees After Loss.

American Homes 4 Rent (AMH) yesterday fired a group of workers, with a focus on acquisition and construction staff, after the housing landlord reported a fiscal second-quarter loss, according to a person with knowledge of the terminations.

The company, owner of almost 20,000 single-family homes, has cut about 15 percent of its workforce this year, including an earlier round of terminations before its initial public offering last month, said the person, who asked not to be identified because the information is private. The Malibu, California-based company, which raised $705.9 million in the IPO, had a net loss of $14 million, or 15 cents a share, on revenue of $18.1 million in the quarter ended June 30, according to a statement this week.

Single-family landlords have struggled to turn a profit while acquiring homes faster than they can fill them with tenants. Hedge funds, private-equity firms and real estate investment trusts have raised more than $18 billion to purchase more than 100,000 rental houses in the past two years. American Homes 4 Rent, founded by B. Wayne Hughes, is the largest single-family landlord after Blackstone Group LP’s Invitation Homes, which has spent more than $5 billion on 32,000 homes.

American Homes 4 Rent executives Peter Nelson, Jack Corrigan, Sara Vogt-Lowell and Janice Stack didn’t respond to e-mails and telephone messages seeking comment on the firings.

The landlord is slowing its property purchases, with plans to spend as much as $100 million a month on 800 to 1,000 additional homes, Corrigan, the company’s chief operating officer, said on an Aug. 21 earnings conference call.

“As far as being able to put money to work, I mean we could easily ramp back up to $300 million-a-month pace if we have clarity that we would have that capital available,” he said. “But we don’t want to get too far out over our skis.”

American Homes 4 Rent owned 19,825 properties for an investment of $3.4 billion as of July 31, according to its earnings statement. About 56 percent of the company’s homes were leased as of June 30.

Only 56% of their properties are rented and the group still wants to spend $100 million a month to buy 800-1000 more homes.

Don't  worry! They could triple that "but they don’t want to get too far out over their skis”.

Really?! What if they already are?

Such silliness explains why existing home sales are relatively robust compared to new home sales. The latter is now slumping because of higher mortgages rates.

Any downturn in the property market will sink this group. And such a downturn may easily be at hand.

For further discussion, please see New Home Sales Plunge 13.4% in July, June Revised Lower; Blame Rising Mortgage Rates

Addendum:

I originally posted "56% of their properties are not rented". The person who caught my typo, said "I would be worried silly if only 56% of my properties were rented".

Not to worry, this is OPM (Other People's Money)  American Homes 4 Rent is playing with.  I am sure the CEO and executive staff of AMH will do quite well no matter what happens, even if AMH goes bust and takes down all the investors in the process.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Diversification: Why Variety is Better When Investing?

What is Diversification?  
  In the investment world, diversification means to invest your money into a variety of investments to help reduce risk. Which means you should never place all of your eggs (money) in one basket (investment) because if something negative happens to that basket (investment) then you'll lose everything (all your money). Instead you should diversify your investment portfolio by investing in a variety of investments such as stocks, real estate, bonds, etc. Unfortunately the average person don't have enough money to invest into a variety of investments. However, this is why mutual funds were created. A mutual fund will give an average person with a small amount of money an opportunity to invest into a diversified investment portfolio. If you would like to create a diversified investment portfolio but you don't have a lot of money, please visit Make Money Work for You (Investing in Mutual Funds) to learn more about Mutual Funds and how investing in them can benefit you.



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Want to Retire Early? Here's how...

   In order to retire from work at an early age, you have to have an early retirement plan. I know some of you all's early retirement plan is to win the lottery and live happily ever after. I'm not saying you won't, but just in case you don't. You might want to have another early retirement plan in place.      Putting some money into a 401k, an IRA, or some other high interest savings account every month is a great way to start setting yourself up to retire someday. Would doing that and that alone guarantee you an early retirement? Probably not, but its still a good decision. Just having a traditional saving account with money in it for retirement is better then not having a savings at all.      "So what do I have to do to retire early?" You have to create another source of income outside of what you are already earning as a worker. "And how do I do that?" First you'll need to start a savings account in which you'll put a % of your monthly income. Make sure this % isn't putting to much of a strain on you or your family's happiness. If it is then its probably too much so save less. Then you'll want to start researching investments to put this money into, such as real estate, a franchise, a small business, etc. Once you choose an investment, you want to learn everything you can about it. If you really don't have the time to learn everything, then seek out the advice of people who are already succeeding at whatever it is you want to do. Once you feel comfortable with your investment, and you have enough money in your savings to invest, then invest.     Ok. Sweet. Your investment is doing good. You have extra money Rollin in every month. What are you gonna do with all that new money? "Blow it on a lot of things I've been wanting to buy but couldn't afford too, up until now." I have to admit that does sound like a lot of fun. But instead of blowin it, you could reinvest it and make more money off of that money. Which would increase your secondary income, and the possibility that your dream of retiring early will eventually become a reality.

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Financial Food for Thought: Good Debt-vs-Bad Debt

  Good debt is when money is borrowed to pay for something that has the potential to increase in value or produce short or long-term income. Taking out a loan to start a business, buy real estate, to invest in stocks, bonds, etc, or to pay for your education (which can increase your income as an employee) is consider to be good debt.  

  Bad debt is when money is borrowed to purchase things that will immediately decrease in value, nor do those things have the potential to produce long or short-term income.
  Borrowing money to buy things such as cars, clothes, etc. which quickly loses its value is consider to be bad debt.   The average person doesn't make enough money to buy everything with cash, which is why people borrow money. However, if you pay for things with cash instead of credit you can save yourself a lot of money. By paying with cash you avoid paying interest on borrowed money. If you are considering taking out a loan to buy something that has the potential to increase in value or produce income, research it carefully to determine whether or not the rewards are worth the risks and if you still think it's a good investment then go for it. Remember that even though an investment may appear to be a really great idea, sometimes even the best ideas don't always unfold as planned.

 Edited by Reginald Forest 




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401ks: Saving and Investing For Your Retirement

 
  A 401k is a retirement savings plan which allows you to put a percentage of your earned income into it before paying taxes. Your employer will normally contribute to your 401k by matching a percentage of whatever you put into it (that's free money). You can then invest this saving into different types of investments such as stock, bonds, and mutual funds. If you start saving for retirement early in life, you will increase your chances of having enough money to provide for yourself during your retirement years. Below is a list of pro and cons to help you decide whether or not investing in a 401k is right for you. 

Pros  
 - You can contribute up to $17,500 to your 401k annually if your 49 years old or younger, and up to $23,000 annually if your 50 or older  
 - Your contributions nor your investment earnings will be taxed until you withdraw them from your 401k.  
 - Most employers will match up to 6% of your yearly salary (that is free money).  
 - In the event of a financial crisis or an emergency, you can borrow from your 401k without having to pay an early withdrawal fee.

Cons  
 - When you begin withdrawing your money from your 401k, it will be taxed  plus you will have to pay a 10% penalty if you withdraw before age 59 1/2.

 Edited by Reginald Forest




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The Dollar Report: U.S. Exports & Imports and How it's Affecting You

Export (v.) means to send (goods or services) to another country for sale. 
Import (v.) means to bring (goods or services) into a country from abroad for sale. 

The U.S. government has announced that throughout 2012 the United States imported more goods and services from foreign countries than it exported. The more goods and services we import the less we produce, not only throughout the U.S. but abroad as well. U.S. corporations are steadily sending jobs overseas to take advantage of the inexpensive labour prices offered by other countries. This causes the unemployment rate to rise here in the U.S. because more and more Americans are being laid off daily and many more are struggling to find employment. This is why I encourage you to learn as much as you can about the world of investing, so that you can create another source of income as an investor or entrepreneur, just in case the company you work for decides to shut down or reduce its labour forces here in the U.S. as well. 
Edited by Reginald Forest 




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The Dollar Report: This is How The Declining Value of the US Dollar is Affecting You

  On the list of most valuable currencies in the world the dollar came in at # 11. This is due to our high national deficit, a decrease in demand for US treasury notes, currency exchange rates, etc. The dollar is still one of the most popular and most trusted currencies in the world. The decline in the dollars value is a problem, because it has affected the dollar's buying power. Which has caused the cost of buying imported goods to increase. However, businesses have chosen to shift this expense over to you the consumer by raising their product prices. Which will affect you at the pump, grocery store, and any other place of business that buy and sell imported goods. Some experts want the dollar to decline, because they think it will help the U.S. economy. These experts believe that a weak dollar will lower the price of our exports, which will make our products more competitive in foreign markets around the world.

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