Private equity is buying up homes in Ohio

A recent article in the ColumbusDispatch, “When Wall Street is your landlord: How institutional investors impact central Ohio,” found that six corporate landlords have acquired a total of almost 7,000 single-family homes to rent out in Franklin County, Ohio. Five of these landlords are owned or backed by private equity firms. 

According to an analysis of property records by the paper, two of the landlords, American Homes4 Rent and Vinebrook Homes, have been active in Central Ohio for more than a decade. In 1999, Nexpoint Real Estate Strategies Fund and Access Capital Partners invested in Vinebrook Homes. 

Four corporate landlords backed by private equity entered the Columbus market around the time of Covid – Progress Residential, which is owned by the private equity firm Pretium Partners; FirstKey Homes, owned by Cerberus; Starwood, which is itself a private equity company; and Main Street Renewal, owned by the Amherst Group. 

David Howard, the CEO of the National Rental Home Council, which represents large single-family home landlords, said, “Columbus has become a vibrant market, with immigration, population growth, companies expanding. Those are the kinds of things that drive demand and interest from rental home providers. There’s demand there.” 

“Columbus is a little jewel, it’s growing, it’s got a young population,” said Amherst CEO Scott Dobson, whose company owns about 600 rental homes in Central Ohio. “And it has an older housing stock that can serve the modern population if you invest in it.”

The paper noted that while there had previously been smaller mom-and-pop type landlords of single-family homes in the Columbus area, this changed after the housing recession of 2007-2011 when millions of people lost their homes to foreclosure and corporate landlords began buying the homes in bulk and renting them out. 

Nationwide, in 2011, no single investor owned more than 1,000 single family rental homes in the U.S., but by June 2022, more than 30 investment firms each owned more than 1,000 homes, for a total of 446,000 homes. 

Critics say the companies push up home prices, make it harder for buyers to find homes and drag down neighborhoods by replacing owner-occupants who care about the home with indifferent corporate landlords.

According to the article, Vinebrook, which owns 1,621 homes in central Ohio, has been the target of frequent lawsuits and complaints due to issues with the upkeep of its properties. The Dispatch found that Vinebrook was among the landlords with the most code violations in Columbus.  

David Painter, the director of the Center for Real Estate at the University of Cincinnati, found that institutional investors spend less money on homes than homeowners or even smaller investors do. “There’s a clear pattern, the owner-occupied homes pull more permits, and the permits are likely to be of higher values,” Painter said. 

Carlie Boos, executive director of The Affordable Housing Alliance of Central Ohio, told the paper that institutional investors are more likely to impose junk fees on tenants, such as lawn mowing charges, and pointed to studies that show institutional investors are quicker to evict tenants than smaller local landlords. The article noted that some studies also suggest that corporate investors charge higher rents. 

These concerns led some Ohio politicians from both parties to propose legislation that would curb investor activity. 

Ohio Senator Bill Blessing, R-Colerain Township, in 2023, introduced two bills to address the issue.  One bill would give tenants of a rental home that falls into foreclosure the first opportunity to buy the property before large investors have a chance. The second bill would have imposed a tax of $1,500/month per property on landlords that own more than 50 homes in a single county. 

Large home investment firms have been “devastating to the health of our nation,” Blessing was quoted as saying in the Dispatch article. 

In 2023, then U.S. Senator Sherrod Brown from Ohio proposed a bill that would prohibit an investor who owns 50 or more single-family rental homes from deducting interest or depreciation on those properties. A press release about the bill noted that in 2021, 16% of homes in Cleveland were purchased by investors, who bought 70% of the homes in a particular zip code. In Cincinnati, investors purchased 15% of homes and nearly half of the homes in some communities, while a single company acquired 29 homes on a single street.