An Ohio home-buyer company is selling hundreds of houses to pay off debts

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Some property equity firms buy lots of single-family homes and rent them out. Ohio-based Vinebrook homes is one of the larger companies. Many of its renters claim that Vinebrook neglects its properties and renters, which the firm denies. Now, the company faces another problem, and it's selling hundreds of properties in order to pay off a huge debt. The Midwest Newsroom's Kavahn Mansouri reports.

KAVAHN MANSOURI, BYLINE: Good housing can be hard to come by, but that's exactly what Julia Cowell and her husband William were looking for.

(SOUNDBITE OF PIANO PLAYING)

MANSOURI: The Cowell's piano is center stage in the couple's four-bedroom home in Hazelwood, Miss., near St. Louis. It's a big family, five kids with another on the way. The one story, light-blue house they rent is typical housing for the area.

JULIA COWELL: The market is pretty competitive for finding a single home to rent that fits our family in it. And so eventually, we found Vinebrook, and this house toured. It looked beautiful. It was perfect for our family. We moved right in.

MANSOURI: Vinebrook homes started buying properties in 2019, when interest rates were low. The company now owns more than 24,000 homes in the Midwest and South. The houses are located in low-to-moderate-income neighborhoods that are predominantly communities of color. On its website, Vinebrook Homes says it provides quality, affordable housing. Some renters tell a different story. And Cowell says problems for her family became apparent shortly after they moved in. She says maintenance orders went unfilled. The roof started to leak. Plumbing issues were rampant. And...

COWELL: Floor's rotting underneath here so badly that this house is completely infested by cockroaches.

MANSOURI: And Cowell says eviction notices arrived if rent was even a day late. A Midwest Newsroom investigation revealed a litany of other problems renters cited, including non-existent customer service, steadily increasing rents and deteriorating properties. And in Cincinnati, where Vinebrook owns more than 3,000 homes, the city sued the company twice for breaking the city's tenant laws. Laura Brunner is CEO of the Port of Greater Cincinnati Development Authority.

LAURA BRUNNER: So you got a great big guy pushing down on the small guy that is willing, for as long as they can, to pay too much for the rent because they don't have choices.

MANSOURI: However, a Vinebrook spokesperson says the company is actually breathing new life into neighborhoods, and without the company's investments, the homes it buys would continue to deteriorate. Besides complaints from renters and lawsuits, Vinebrook is also coping with a huge $1.2 billion debt caused by a changing housing landscape and floating interest rates. In a December Securities and Exchange Commission filing, the company said it would have to sell off about 1,700 homes to satisfy that debt. It's already sold more than 400 of them. Noel Christopher, a single family home rental expert and member of the industry group the Forbes Real Estate Council, says that's a typical strategy companies like Vinebrook use when they're in trouble.

NOEL CHRISTOPHER: When you get into hard times, it's easy to cull the portfolio and sell homes and get that full value.

MANSOURI: That plan may help Vinebrook, but Laura Brunner says as institutional buyers rapidly buy and sell homes, they're fundamentally changing vulnerable neighborhoods and shutting out individuals who want to buy homes.

BRUNNER: When you are targeting Black and brown neighborhoods - and we already have this incredible wealth gap in our country - the very people that need the opportunity to start to build wealth are being blocked out.

MANSOURI: However, Vinebrook says it's prioritizing and has sold a portion of homes to its tenants. That doesn't persuade U.S. Senator Sherrod Brown of Ohio. Brown introduced the Stop Predatory Investing Act in response to Vinebrook's business dealings in Cincinnati.

SHERROD BROWN: They take advantage of federal law, which essentially subsidizes these predatory investors and do great damage to their communities and to these families.

MANSOURI: The proposed law would bar companies that buy more than 50 single family rental homes from receiving federal tax breaks. For NPR News, I'm Kavahn Mansouri in St. Louis. Transcript provided by NPR, Copyright NPR.