Three Years Ago, It Didn’t Exist Here. Today, An Ohio Company Is One of Omaha’s Biggest Landlords.
Kerry and Vicky Blacketer have lived in their North Omaha home for nearly 16 years. Their children graduated high school while living here. Their grandchildren play house in the living room.
When the drains kept backing up, Kerry Blacketer – a bricklayer by trade – replaced the pipes in the basement himself. When the front porch sagged, he put in new brick pillars, hammered in some new floorboards and gave it a fresh coat of paint.
The Blacketers did these repairs with their own money.
Now they raise chickens in the backyard.
“So, it’s home,” Kerry Blacketer said. “It’s home.”
Which is why he was shocked when, a few months ago, he tore open a piece of mail addressed to him – an envelope with no return address, he says.
It was the first piece of U.S. mail he had ever received from his new landlord.
Inside was an eviction notice.
The Blacketers knew their longtime local landlord had sold this house just southwest of Miller Park. They didn’t know that their rental home had been bought by an Ohio-based private company that’s buying up lower-priced homes at an eye-widening rate across the Great Plains, Midwest, the South – and now in Omaha.
Today, Vinebrook Homes, a company with $2.4 billion in assets that didn’t own a single home in Omaha 30 months ago, has become one of the largest landlords in the city.
The flurry of purchases is helping to superheat the housing market in poor neighborhoods. It’s raising rents in North Omaha. And it’s concerning experts, tenants, local landlords and real estate agents who worry that giant out-of-state real estate investment groups like Vinebrook are making it harder for Omahans to buy their own homes.
The Flatwater Free Press and KETV have spent two months looking into the local impact of Vinebrook, which is buying Omaha houses under the names “VB One” and “VB Two.”
From January 2020 through September 2021, Vinebrook bought more Douglas County single family homes than anyone else, according to data from the Douglas County Registrar and Assessor of Deeds.
All told, Vinebrook Homes has bought up some 250 houses in the metro area since Oct. 2019, a company spokesman said.
It operates the homes as rentals, often booting longtime tenants and raising rents in the process, say local landlords and tenants.
As of May 4, VB One had the third-most units listed on the City of Omaha landlord registry.
Roughly two-thirds of the Douglas County homes Vinebrook owns are in North Omaha – the historically redlined area which, for generations, contained the only neighborhoods where Black Omahans were allowed to buy a house.
The number of home sales has recently exploded in North Omaha, jumping by 80% between 2020 and 2021.
“They’re just dominating the housing market in North Omaha, which isn’t a good thing,” said Manne Cook, a former City of Omaha urban planner who’s now the project lead at Spark CDI, a neighborhood revitalization nonprofit working on housing-related projects in North Omaha. “They’re displacing communities. They’re displacing people. What is the opportunity for people to buy those homes now? Will there be as many opportunities going forward?”
“A really attractive business model”
A similar phenomenon is playing out across the country. Giant private-equity backed firms now own vast swaths of real estate border to border. They own more than a million apartment units. They own entire suburban housing developments in boomtowns like Atlanta, Houston and Miami. They own the land upon which trailer parks sit.
Corporate investors bought nearly one of every five homes – the two- and three-bedroom structures long seen as the passage to the American Dream – sold in the United States during the fourth quarter of 2021.
Vinebrook is a rapidly growing player in this market, quickly buying up homes in 23 markets including Kansas City, St. Louis and now Omaha.
At the end of 2020, the company owned 9,282 rental properties. By this March, it had more than doubled its portfolio to 21,144 single-family rental homes, according to its latest Securities and Exchange Commission filing.
“We invest in cities like Omaha where there is growing demand for (single-family rental) homes,” said Dana Sprong, co-founder and managing partner of Vinebrook Homes, in an email sent to the Flatwater Free Press.
He noted that Vinebrook purchases represent only a tiny fraction of Omaha’s overall housing supply, which is true – “VB One” owns roughly 1% of parcels on Omaha’s rental registry.
The company’s business model caters to people who want or need to rent, Sprong argues.
“Our presence is a response to the condition of the housing market and the fact that demand for renting homes is increasingly compelling for changing consumer tastes and goals,” he said.
Business is good for Vinebrook and companies like it, said John Johnson, a Marquette University professor who studies the changing housing market.
The expert watched as Vinebrook burst onto the scene in Milwaukee. The company identifies cities where the rent-to-own value ratio is skewed, making it lucrative to buy up many homes and rent them out, he said.
“The profit margins can just be wild,” Johnson said. “You can see why this is a really attractive business model for people who have figured it out.”
In Milwaukee, as in Omaha, Vinebrook focused on the city’s poorest neighborhoods, homes often occupied by families of color. They evict Milwaukee residents at higher rates than local landlords, he said. Vinebrook now owns massive amounts of real estate in that city, while having almost no local employees and virtually no civic presence in Milwaukee.
“It is literally removing money from the city’s economy, often money that’s coming out of the pockets of some of the poorest citizens of that town,” Johnson said.
With no fanfare, Vinebrook bought its first Omaha home just before Halloween 2019. It hasn’t stopped buying since. The flurry of purchases hasn’t always been a good thing for Omaha, say people who sold homes to Vinebrook, rent from them and compete with them for lower-income housing.
North Omaha impacted
Angel Starks and her real estate agent colleagues began to notice a sharp increase in out-of-state buyers. They took note of their new tactics.
These buyers pay in cash. They waive standard inspections. They make offers over the list price.
That’s the aggressive approach that Vinebrook takes as well – an approach outlined by one of Vinebrook’s local contractors, longtime Omaha-area real estate broker Bruce Powell, in an email sent to real estate agents early this year.
The email was forwarded to the Flatwater Free Press by an industry insider, not Starks.
In the email, Powell said Vinebrook had bought “over 16 million dollars’ worth of property” in the Omaha metro in the past year. “We want to keep that going this year,” he wrote.
“We can buy them 1 at a time or if you have an investor that has 5000, we can do that also… Our offers are cash, quick closings. Once we do our walk through there (is) no formal inspection, termite inspections or appraisal.”
Vinebrook has amassed $55 million in cash, according to its most recent filing. It uses that money as a hammer, making cash offers that most Omahans – people who must take out a loan to afford a house – can’t beat.
“That puts first-time home buyers at a disadvantage,” said Amanda Brewer, CEO of Habitat for Humanity of Omaha. “They can’t compete with out-of-state investors who have cash offers.”
A cash sale over the list price often increases the home values on the block and neighborhood, said Starks, a real estate agent who sells homes all over the metro, including in North Omaha.
That’s good if you are selling a home. It’s not necessarily good if you are a North Omaha homeowner. Property valuations in the area are now the most undervalued in the county. Valuations – and the resulting tax bill – will likely soon increase.
And it’s very bad if you are an Omaha resident hoping to buy an affordable home in the northeast part of the city.
“It’s pricing everyone out,” Starks said. “If there’s nothing for anyone to buy…we’re giving them a mindset that they are meant to be renters forever.”
“That should be a choice, not a corner they’re painted into.”
Black Omahans are especially impacted, said Pierce Greenberg, a Creighton professor who has studied eviction and homeownership issues.
Most Americans’ biggest financial asset is the home they own, Greenberg said. It’s the big-ticket item they sell or pass to the next generation. The racial wealth gap is exacerbated by the fact that fewer Black adults own their own homes.
“We can’t untether this conversation from talking about race,” Greenberg said. “For this to be happening in neighborhoods with a history of racial segregation…where all of this is playing out is an issue that can’t be ignored.”
“That’s a problem”
Even Omahans who have benefited from Vinebrook’s emergence aren’t always sure the company’s presence is good for the city.
Nate Bjorklund had owned and rented out a small two-bedroom house on N. 33rd Street for more than a decade.
Then, encouraged by a local property manager, he put it on the market for “a crazy number.”
Vinebrook counter-offered “with not quite as crazy of a number” he says. Just like that, the deal was done: $72,000 in cash, more than triple what Bjorklund paid for the house in 2008.
The local landlord was thrilled. At least until he saw what Vinebrook was doing with the home.
The tenant living in the home when it was sold was “fantastic,” Bjorklund said, but Vinebrook had no interest in keeping her there. Instead, they wanted her to leave so they could put in new carpet, new paint – and a new, higher monthly rate.
Bjorklund had rented the home for $695 a month, a number he felt was fair and could always attract a tenant. Now, he said, Vinebrook has it on the market for $995 a month. The home has sat vacant for months, its old owner said.
“My wife and I are very small time, and we understand that if you can take care of people, karma has a way of coming back to you,” he said.
“Unfortunately, I don’t think this group really gets that,” he said of Vinebrook.
Shauna and Andre Mackins are also frustrated with Vinebrook.
The renters live in a Vinebrook-owned home on Maple Street. They experience nuisances that will sound familiar to many renters, no matter who their landlord is: The screen door is busted, they said. Cold air pours in through the sliding doors in the winter.
But the Mackins said they have also faced real issues with Vinebrook’s operation. When Shauna Mackins tried to pay February rent – on the last day before an eviction notice would be sent – she said she got caught in a customer service nightmare. One Vinebrook representative took down her info, promised to call her back, and didn’t. She called back, and the same thing happened. She tried to contact the district manager to no avail.
The clock ticked toward late afternoon.The banks closed for the day. An eviction notice was automatically triggered by the company.
The Mackins racked up hundreds of dollars in late fees to avoid eviction. Much could have been avoided, Shauna Mackins said, had she simply been able to speak to the correct Vinebrook representative.
“Buyers beware,” she said. “I wish we had time to do our research (on Vinebrook) before we moved in here.”
In an email, Vinebrook co-founder Sprong said that Vinebrook takes resident concerns seriously. They monitor these requests and the company’s response time, he said, and are working to “enhance our customer service offering,” he wrote.
Vinebrook is far from the only national real investment company plunging into local housing markets.
For example: Invitation Homes is a company built by Blackstone, the world’s largest private equity firm, which started buying up houses in the wake of the 2008 mortgage and foreclosure crisis.
Today, Invitation Homes, which has spun off from Blackstone, is a massive publicly-traded company. It owns and rents out roughly 80,000 homes – making it the single largest landlord of single-family homes in the country.
Invitation owns more than 13,000 houses just in the Atlanta metro area.
Omahans working to keep housing affordable say that the entrance of private equity-backed firms into the local market is making that goal harder.
Matthew Cavanaugh is the executive director of Holy Name Housing, a nonprofit that aims to create opportunities for home ownership by building new houses and renovating older ones.
Last spring, Holy Name put in a bid on a house – a bid that would have been successful in years past.
The house went to an out-of-state corporation. It went for far more than the asking price.
“We got blown out of the water on that purchase,” he said. “That was my first peek into, ok, this whole market of existing housing is not even worth engaging in.”
Earlier this year, Holy Name hoped to buy a portfolio of homes from another investor. That seller also sold to an out-of-state company at what Cavanugh considered far above market rates.
Now, he said, Holy Name doesn’t bother bidding on existing homes.
“There’s a fixed amount of homes in a community. Every time one is removed as an opportunity to be owned, that’s a missed opportunity for that family to build the wealth homeownership provides. That’s a problem,” he said.
Sprong, the Vinebrook co-founder, argued that the shortage of U.S. homes is a result of underbuilding over the past decade, as well as two giant generations, Millennials and Baby Boomers, either entering the housing market or staying in it.
Vinebrook isn’t the problem, he said. “Our work is part of the solution to meet that demand, not the cause of a nationwide affordable housing shortage.”
“Our whole life is here”
Kerry Blacketer, the longtime renter of a home now owned by Vinebrook, doesn’t much care about the market forces that led Vinebrook to own hundreds of Omaha homes.
He knows that Vinebrook hiked his and Vicky Blacketer’s rent from $875 to $1,000 a month. He knows that he got into a heated and confusing dispute with his new landlord over a lease – a dispute marred, he said, by another letter Vinebrook sent threatening ejection from the home if the longtime renters didn’t quickly sign.
The rent increase doesn’t bother him as much as the fact that he can’t pick up the phone and call his landlord. That he can’t have a face-to-face conversation with the person who owns the house his family has lived in for nearly 16 years – the person who has the ultimate say on whether they get to stay in this place they call home.
Blacketer said he ended up sending emails to Vinebrook customer service, begging them to “get this straight.”
“My wife and I’ve been in this house for several years. Children, grandchildren, pets,” he said he told the company. “Our whole life is here. Get this fixed.”