The Realistic Place Buyer: A Case Study in Cincinnati, a State Department Officer for an Investment Firm during the Post-Pendemic Lockdown
CINCINNATI — Demetrius Harper-Edwards and his girlfriend, Sarai Yisrael, spent the pandemic lockdown dreaming of owning a home. They saved for a down payment, and worked to repair their credit.
“I was literally on that couch just going crazy with the paperwork,” says Yisrael, who was pregnant with their now 2-year-old son. Harper-Edwards also has twin 8-year-old daughters.
She’s a seamstress and sells her own designs; he’s a carpenter. Yisrael says buying a place would be especially meaningful for her, since as far as she knows no one in her family ever has.
“My mom and my grandmother, they were actually born in Alabama,” Yisrael says. She assumes their ancestors were slaves, and says homeownership would “change the face of our family. … It means that I can leave a place for my children. It will take some stress off my kids’ shoulders.
Of course, home prices skyrocketed during the pandemic, worsening a long-term shortage of affordable housing. Mortgage rates and inflation are making owning a home out of reach for many.
The homes that it was part of were owned by an investment firm. The letter explained that the local development agency wanted to assist them with the purchase of the house.
The Port of Greater Cincinnati Development Authority is the owner of the homes. It’s run by Laura Brunner, who says she was shocked last year when her staff discovered — after months of digging — that institutional investors own at least 4,000 houses in the county.
Brunner says this threatens to exacerbate the racial wealth gap in Cincinnati, where only a third of Black residents own homes. Here and nationwide, most investor home purchases are in low- to moderate-income and minority neighborhoods.
She says they’ve taken a large amount of inventory off the table and say people don’t get to own homes anymore. “So they’re really capturing them as renters.”
Brunner says large investors are more likely to let houses fall into disrepair. She accuses them of treating local properties like a cash cow, not investing enough to maintain them.
So when that California company, Raineth Housing, went under, the Port moved to buy up its properties scattered around Cincinnati. It’s a first — she doesn’t know of any other public agency like hers in the U.S. that’s done it — and it’s risky.
Brunner says the agency outbid 12 other investors, taking on $14.5 million in debt for those 194 homes. It has since paid $2 million more toward fixing them up.
Rental Housing for the Port Authority: On-site and onsite Service, and the Case of a One Level, Two-Family House
“We’re entering a period of time where I believe there will be greater demand for rental housing,” Howard says, “and I think the industry has an important role to play.”
Partly in response to such criticism, Howard says some investors are starting to help tenants who want to become owners by, for example, reporting on-time rental payments and sponsoring financial literacy classes.
The purchase price for a home in the Port is around $78,000. Depending on how much it has to invest to fix them up, the amount that it will sell them for might be different. When the agency was able to view all the homes, it was obvious that many needed more work than they were expecting.
Facilities manager Ron Shouse shows a tour of a rehab at a one level, three bedroom house. In the kitchen, a contractor is pulling up nails from a saggy wood floor with a large hole. Shouse thinks the house was flooded after the pipes froze.
“Floor’s rotten,” Shouse says. It’s rotten more than we thought. Cabinets are rotten.” His original estimate for repairs was $10,000, but that will go up to include things like new cabinets.
It’s necessary work in homes with tenants still in them. There were many broken boilers, roofs, and mold. One family’s toilet is not connected to a pipe.
The Davidsons have been living in the home for more than five years and have appreciated the low rent of $700 a month. They say they have spent a lot of their own money to repair things, they rely on his dad for help, and more work needs to be done.
The Port Real Estate Program: Rents, Buys and Flip-Offs for Low-Energy Families in the midst of Housing Crisis
The roof would leak. Davidson says the plumbing and electrical needs to come out. Some front porch steps are rotting out, and they’ve complained about having only a subfloor inside, with no finished flooring on top. Perkins says one of their kids had a bad splinter.
Public subsidies haven’t been used to fund any of this so far. It wants to make money by renting and then selling the homes. But the whole point is to keep rents affordable, and sales prices low enough that people can pay.
At a public library on a recent Monday night, more than a dozen of The Port’s new tenants turned out for a homeownership workshop by Working in Neighborhoods, or WIN.
Hope Wilson is the housing program manager and she leads a discussion about credit history, banking and extra costs beyond a mortgage.
Wilson says either you’re going to become very handy or you’re going to have a great savings account.
Out of all The Port’s tenants, so far a couple dozen or so have expressed interest in buying, though it may take years before some are ready. The economic and health crises of the past few years set many families back, says Sister Barbara Busch, WIN’s executive director. Tenants with outstanding back rent are being helped to pay through rental assistance by The Port and partners.
Still, Busch is excited about the potential. In recent years she’s watched with frustration as low-income families trying to buy homes make multiple offers over many months, only to lose out again and again to investors.
“[The investors] have cash on hand. She states that they can close within 10 days. “They can do all the things that makes both the real estate agent and the seller happy.”
Brunner acknowledges that 200 homes is just a sliver of the market. She wants The Port to buy more and would like to see the program become a national model, though she isn’t sure how many other cities have an agency like hers that can finance enough money.
A New Buyer’s Guide to Rental Property Management: Carlyn Lovrien and her husband, Doug Brien, and a First-Class Real Estate Agent
He says that he didn’t believe he was going to be able to do that. But he’s been told he qualifies to move ahead with the process.
Harper-Edwards’ family are homeowners — he says one house has been passed down for 60 years. If this all works out, he says, maybe he’ll buy another place one day and become a landlord himself.
The offers came in and she agreed to sell it for $240,000, but when the negotiations dragged on she decided to walk away. Why not? Within weeks she had a tenant paying $1,900, more than enough to cover her expenses, and she plans to relist when prices are higher. She is collecting rent checks.
The decision to list a home for rent instead of for sale has become so common, Redfin recently started a new service to help people list their homes for rent. Historically, Mr. Kelman said, real estate agents haven’t had much interest in rentals, which fetch much smaller commissions than sales. But so many would-be sellers are choosing to rent out their homes right now that agents worry they will lose their clients if they aren’t able to help them.
Doug Brien was part of the wave of new buyers who in the years after the housing bust built rental empires by scooping up tens of thousands of homes when prices were still depressed. His company, Waypoint Homes, is one of several large investors like Invitation Homes and American Homes 4 Rent that have consolidated the single-family rental business, which until the Great Recession was for the most part limited to investors with a handful of properties.
The self-employed accountant who lives in Texas, is named Carly Lovrien. Ms. Lovrien and her husband have two rental homes they manage through Mynd — investments that she said they would never had bought if they’d had to run the business themselves.