As Julia Cowell talked about the cockroach problem in her four-bedroom home, a pair of them – as if on cue – scurried up the wall behind her before vanishing into a crack.
“My kids walk around with bottles trying to spray them and stomp them,” Cowell said. “All I want to do is take my kids out of here.”
Cowell, a former engineer who is now a stay-at-home mom, moved into her rental home in Hazelwood in northern St. Louis County, in 2019. Her landlord, VineBrook Homes, was a single-family rental provider new to the St. Louis area, and the house was ideal for her growing family.
With four bedrooms, there was space for her five children. There was even a finished garage where she could homeschool them. It was affordable enough for she and her husband William, a disabled veteran, to manage.
“It looked beautiful, and it was perfect for our family, so we moved right in,” Cowell said.
Cowell’s story is familiar to many current and former VineBrook Homes renters. Tenants the Midwest Newsroom interviewed described moving into an apparently pristine VineBrook home, only to run into maintenance and safety problems soon after.
From spree to sell-off
Currently, VineBrook owns more than 24,000 single-family homes nationwide.
A 2023 investigation by NPR’s Midwest Newsroom examined VineBrook Homes’ fast-paced buying spree of homes throughout the country – nearly 3,800 in the St. Louis, Kansas City and Omaha metro areas combined.
The Flatwater Free Press’ own investigation into VineBrook showed that it didn’t own a single Omaha home in 2019. By 2022, the Ohio-based company was one of the largest landlords in the Omaha area. They bought roughly 250 homes in three years, most of them rental homes in North Omaha.
In the wake of that spree, both in Omaha and elsewhere, tenants complained about unresolved maintenance issues, unfounded evictions, aggressive rent collection tactics and poor customer service.
Now, the company faces new pressure in the form of debts accrued by its rapid and massive expansion. Recent Securities and Exchange Commission (SEC) filings show that for the first time in its four-year history, VineBrook’s rampant purchasing of single-family homes throughout the region has shifted to a sell-off as it struggles to pay what’s due this year.
In the same SEC filing, VineBrook said it would sell at least 1,700 homes nationwide to pay the debt balance. Experts say it could be a sign of what’s to come for other real estate investors in the single-family rental market.
Part of the plan
VineBrook is Milwaukee’s single largest property owner. In a December SEC filing, VineBrook's Dallas-based executives told regulators they weren't sure VineBrook could “continue as a going concern” in the next 12 months.
"If any property owner of that size were to go under, it's a concern to the entire region, but especially to the neighbors," said Wisconsin Rep. Evan Goyke in a Milwaukee Journal Sentinel article.
But the situation for VineBrook may be less dire than it appears.
“When you get into hard times, it’s easy to cull the portfolio and sell homes,” said Noel Christopher, a single-family rental expert and a member of Forbes Real Estate Council.
Property taxes, insurance, labor costs and soaring interest rates are making the business of single-family rentals increasingly difficult to sustain, Christopher said. For VineBrook, the current sell-off may be an opportunity to prove that its business plan works.
“This is what these funds planned for,” Christopher said. “The difference in single-family rentals is, instead of having to cull a 100-unit building, you can cull 100 different homes. And really, what’s left over is you have a stronger portfolio.”
Christopher said single-family rentals have twice the value of other assets because they create profit as rentals. And, if they underperform or become problem properties, companies can sell them to deal with debt – like VineBrook is doing – or use them to raise funds for new ventures.
Christopher said single-family rental investors bought homes with less due diligence before interest rates skyrocketed. He said many investment funds treated the low-interest rates like “free money.”
“That’s really the thesis,” he said. “You could buy a move-in-ready home when rates were really low and move somebody in there with minimal work.”
Now, Christopher said, investor funds are applying a more “sharpshooter” approach to buying new properties, carefully considering data instead of buying available housing stock. He said VineBrook likely isn’t the only investor company going through the same sell-off, but may be the only one struggling in a public way.
“A lot of groups were able to buy a lot of homes, and then, they kind of have the philosophy of ‘we’ll figure it out later,’” Christopher said.
Christopher said proposed regulation and a bigger spotlight on the single-family rental business is putting pressure on VineBrook and companies like it to change the way they operate their business.
VineBrook declined a request for an interview but said in an email that its core mission remains the same: expanding access to quality, affordable single-family homes.
“Our business is structured to revitalize and expand the stock of properties available for lease, but we do sell homes at various times for a variety of reasons,” a VineBrook spokesperson said in an email. “Homes identified for sale are typically sold vacant and we make every effort to align properties for sale with owner occupant buyers where possible.”
The company recently completed a bond offering, raising more than $400 million from investors to pay down its debt.
Laura Brunner is CEO of the Port of Greater Cincinnati Development Authority, a development agency based in a city where VineBrook has significant holdings. For her, VineBrook and other private equity investors are creating an unfair cycle for renters.
“Because of a shortage of housing in general, (tenants) are victims to accepting the unfair practices of the landlord,” she said. “So, you got a great big guy pushing down on the small guy that is willing to pay too much for the rent, because they don't have choices.”
Cowell said she’s experienced that sort of behavior from VineBrook. She described the house she lives in as falling apart, and no matter how much she cleans or hires professionals, the roaches still emerge from the floors and walls. Yet, VineBrook cancels her requests for maintenance regularly, she said.
“We’re over $800 into this, and (pest control) can’t do anything about it,” Cowell said. “We’ve contacted (VineBrook) multiple times to see if they’ll fix it. They’ve never responded because there’s nobody to talk to.”
Brunner said when private equity landlords like VineBrook buy up tremendous amounts of housing stock, they fundamentally change communities and neighborhoods. When VineBrook sells, the problems multiply.
“That street for 50 years might have had very stable homeownership where people knew each other now has a more rotating population and the sense of place is diminished,” Brunner said.
The business practice also prevents people in those neighborhoods, particularly people of color, from building wealth through homeownership, she said.
A Midwest Newsroom analysis found the majority of homes managed by VineBrook Homes in Kansas City, St. Louis and Omaha are in census tracts that are predominantly non-white and have median household incomes between $40,000 and $60,000.
The picture is similar in Milwaukee, where VineBrook acquired more than 1,000 single-family homes in similar neighborhoods starting in 2019.
Looming legislation
The pressure of debt and high interest rates aren’t the only factors putting pressure on VineBrook. The pace at which VineBrook purchased homes over the past five years – along with mounting tenant complaints – have spurred local and federal legislative proposals to regulate the single-family rental business.
Nebraska State Sen. Justin Wayne, a Democrat, introduced a measure in February to rein in companies like VineBrook. Under Wayne’s proposal, a corporation, a hedge fund or other business would not be able to purchase a single-family home unless the company is based in Nebraska and its principal members are state residents.
Wayne is from Omaha, where VineBrook quickly became the city’s third largest single-family property owner after a buying spree that began in 2019.
In 2023, U.S. Sen. Sherrod Brown (D-Ohio) introduced the Stop Predatory Investing Act to prevent investors from snatching up real estate nationwide. The act would prohibit buyers who acquire 50 or more new single-family rental homes from receiving tax breaks.
“They take advantage of federal law, which essentially subsidizes these predatory investors and do great damage to their communities and to these families,” Brown said. “Too many people are evicted as a result, too many communities are hurt as a result. Too many cities lose tax revenues for their streets and water systems and bridges and everything else.”
In its statement to the Midwest Newsroom, VineBrook Homes said legislation should seek to promote collaboration with public and private groups instead of leading efforts to, “drive them apart and discourage collective action.”
“Affordable housing is a complex issue, and effecting meaningful change at scale requires the public, private, and nonprofit sectors to work together at the local, state, and national levels,” the company stated. “Lawmakers are well-intentioned, but their actions often create unintended consequences and costs for consumers.”
VineBrook is a major property owner in Ohio. In fact, a significant portion of its single-family rentals are in the Cincinnati area, where the company has run afoul of the city government, which sued VineBrook for violations of the Ohio Landlord Tenant Act and Cincinnati Municipal Code, and again for allegedly breaking a settlement agreement from the first lawsuit.
"VineBrook’s neglectful behavior has caused significant harm to renters, and the City of Cincinnati will fight back with everything we have to protect our residents,” said Mayor Aftab Pureval in a press release regarding the lawsuits.
The End Hedge Fund Control of American Homes Act, proposed by U.S. Sen. Jeff Merkley of Oregon in 2023, would require private equity investors to sell all of their homes over 10 years. Those that don’t would be heavily taxed.
In January, U.S. Sen. Jacky Rosen of Nevada introduced the Housing Oversight and Mitigating Exploitation (HOME) Act. It would task the U.S. Department of Housing and Urban Development (HUD) with investigating alleged price manipulation and gouging by corporations.
Brown said that in addition to the tax dollars lost, companies like VineBrook Homes and other investment funds are also outbidding prospective homeowners, making it harder to buy a home in an already difficult housing market.
“Families can always be outbid by these gargantuan Wall Street companies who keep cash that they can use and then get tax breaks on top of it,” Brown said. “They’ve got really good accountants, really good lawyers, they take advantage of federal law, which essentially subsidizes these predatory investors.”
Brown said investment groups typically buy houses in middle to low and middle income neighborhoods, where families are already struggling to find homes they can afford.
Moving day
In response to the Midwest Newsroom’s request for an interview in 2023, VineBrook sent us a statement, which read, in part:
“Our team prioritizes customer service. We are committed to providing a transparent rental process for our residents and are constantly seeking ways to enhance our customer service offering, incorporating new technologies and touchpoints to deliver a high-quality experience.”
Cowell said her family’s experience does not reflect VineBrook’s promise of quality and responsive customer service.
Over the past four years, Cowell said the nearly 70-year-old VineBrook house her family lives in fell further into disrepair with little maintenance by VineBrook. Meanwhile, the rent continued to rise.
When the Cowells started renting the home, it was $1,000 a month. As of this year, she and her husband pay $1,600 a month.
For the Cowells, moving day can’t come soon enough. They plan to rent again, somewhere out of state and far away from VineBrook Homes.
“We’ve actually already started packing,” Cowell said. “We are looking to take the kids and ourselves and get out of here. Hopefully, by the end of the month.”
This story comes from the Midwest Newsroom, an investigative journalism collaboration including IPR, KCUR 89.3, Nebraska Public Media News, St. Louis Public Radio and NPR.