In February, Jenike Allen traveled to housing court in Cincinnati to try to stave off eviction from her three-bedroom rental home. Her landlord said she had failed to pay a rent hike it had told her about, and Allen wanted to assure the judge she had never received notice of an increase.
A single mom who cares for Alzheimer’s patients at a nearby nursing home, Allen didn’t have a lawyer and waited nervously in the courtroom for her case to come up. As she did, a woman Allen didn’t know described her own eviction to the court. Not only were her allegations the same as Allen’s, so was the woman’s landlord.
“We had the exact same story and the exact same company — VineBrook Homes,” Allen told NBC News. “If I would have told somebody this, they’d say, ‘You’re making it up.’”
Allen’s experience in court that day was no anomaly, local legal aid lawyers say. VineBrook Homes Trust Inc., which owns over 3,000 single-family homes in the Cincinnati area, is one of the most aggressive landlords in bringing eviction proceedings against its residents, they say. A big institutional owner of over 24,000 single-family homes in mostly lower-income areas, VineBrook Homes is a real estate investment trust (REIT) with properties in 18 states, including Alabama, Indiana, Missouri and Mississippi.
“They are one of the worst landlords in our service area,” said Nick DiNardo, managing attorney at the Legal Aid Society of Southwest Ohio, who estimated that his office has handled hundreds of VineBrook evictions over the past two years. “They charge improper, or in some cases, illegal fees, they lock people out of the [online] rent portal when the tenant doesn’t pay these improper fees, they give the tenant no way to contest the fees, and then immediately file eviction.”
VineBrook Homes was founded in 2007 by Dana Sprong, a Massachusetts real estate developer and Harvard Business School graduate, and his partner Ryan McGarry. The company is one of a growing number of institutional investors buying up single-family homes across the country that they turn into rentals. It is backed by wealthy investors and affiliated with a large real estate and private-equity firm called NexPoint Capital in Dallas, according to regulatory filings.
Sprong declined to respond to DiNardo’s criticism or to answer specific questions about disputes and difficulties Allen and other VineBrook renters have related to NBC News. Instead, he provided a statement saying the company’s mission is “to provide safe, functional, and clean rental homes that are affordable to a range of budgets. Our commitment and investment to delivering affordable homes to Cincinnati is meaningful, with demonstrated results and satisfied residents — more than four out of five residents renewing each year — and average residency approaching five years in our homes.”
Purchases of housing stock by institutional investors like VineBrook have impacts extending far beyond their tenants, research shows. Ownership by these investors also raises housing costs across a region, according to 2020 research by the Federal Reserve Bank of St. Louis. And higher housing costs can contribute to increased homelessness, a 2020 study by the Government Accountability Office found; it concluded that a $100 increase in median rent in an area was associated with a 9% increase in its estimated homelessness rate.
Laura Brunner, president of The Port of Greater Cincinnati Development Authority, an economic development agency, characterizes VineBrook’s business model as predatory and says it and other absentee landlords are causing significant woes for renters in Cincinnati.
“For decades, real estate investment trusts and investment funds have been pursuing office buildings, apartments, retail space, but after the foreclosure crisis, they started picking up single-family homes cheap,” Brunner told NBC News. “They realized the leverage is much different when you’re talking about a poor family than if Walmart is your tenant. It’s easy to bully them, not take care of their needs, evict them if you don’t like them or raise their rents.”
VineBrook declined to respond on the record to Brunner’s views.
In July 2021, the city of Cincinnati sued VineBrook to recover over $600,000 in unpaid water bills and fines it owed for building code violations, litter and trash citations. The suit accused VineBrook of “negligent, reckless, and intentional conduct” that “interferes with the public health, welfare, and safety in Cincinnati;” and identified approximately 50 properties with code violations including hazardous wiring, yards with grass over 10 inches high, unrepaired roof and fire damage and no smoke alarms.
VineBrook would not comment on the record about the suit but settled it in August 2021, paying almost all the city said it owed.
Compared with other states, Ohio has landlord-friendly eviction laws, legal aid lawyers say, making it something of a magnet for big real estate investors. Tenants accused of nonpayment of rent typically receive what’s called a three-day notice telling them they must move out within that period or face an eviction proceeding. From start to finish, evictions can take about a month, legal aid lawyers say.
Back in February, the judge who heard Allen’s case put off her eviction, requesting that VineBrook produce the notice it said it had sent about her rent increase. VineBrook failed three times to provide the documentation, according to a lawsuit filed on Allen’s behalf. Throughout the process, Allen said she tried to contact VineBrook, both on the phone and through its online portal, but was unsuccessful.
After trying to defend against the eviction herself, Allen, a VineBrook tenant since January 2021, sought legal help from Jordan Cotleur, a staff attorney at the Legal Aid Society of Greater Cincinnati. Allen began paying her rent to the court and in June reached a settlement with VineBrook to rescind both the rent increase and the eviction; the settlement was filed with the court and reviewed by NBC News.
But that wasn’t the end of Allen’s travails with VineBrook. The next month, a notice from the landlord again gave her three days to leave, stating that she had not paid her rent. This time, VineBrook claimed Allen owed almost double the amount agreed to under the settlement struck in June.
In late August, Cotleur filed a complaint and temporary restraining order against VineBrook saying it has repeatedly mishandled Allen’s rental account and harassed her with eviction threats.
Allen’s case “is a classic example of how automation and lack of communication with private-equity-backed companies like VineBrook lead to housing insecurity,” Cotleur told NBC News. “We have multiple clients right now who were locked out of the VineBrook portal for increased rents, charging fees without notice. These tenants don’t realize what’s happening until they are in eviction court.”
Vinebrook’s spokesman declined to comment on Cotleur’s complaint and criticisms.
In October, after NBC News contacted the company about her case, VineBrook reached a second settlement with Allen under which it agreed to rescind the fees it had charged, dismiss the new eviction and pay all of her legal costs. Under the second settlement, Allen agreed to pay $95 more in monthly rent for a new lease. Cotleur said Allen still had difficulty communicating with VineBrook through its online portal and finally signed the new lease manually.
Denisha Vaulx, a former VineBrook tenant, told NBC News she had constant problems getting the company to respond to her maintenance requests, including turning on the furnace, fixing a broken front door lock and ejecting a squatter who was living in a basement area. She moved out of the property as soon as she could, she said.
“Maintenance requests went unanswered for weeks,” Vaulx said. “At one point there was an infestation of bugs I had to remedy myself because they wouldn’t fix it. The shower broke, the heating was messed up. Only when I put my rent into escrow with the court and withheld payments, that’s when they came and remedied what was wrong.”
Vaulx provided NBC News with photos of broken fixtures, leaks and screenshots of text messages indicating that her repair requests were unanswered. VineBrook declined to comment on Vaulx’s criticisms, saying in a statement, “VineBrook continually strives to address maintenance issues quickly and effectively.”
In addition to quick evictions and code violations, VineBrook’s large purchases of starter homes harm the Cincinnati area in another way, DiNardo said. “They’re certainly buying homes that would be affordable for the first-time homebuyer, taking a lot of that supply out of the market,” he told NBC News.
Zenova Jenkins can attest to this. A resident of a rental home in northern Cincinnati, Jenkins said she’d told her prior landlord she’d like to buy the property if he ever wanted to sell. Jenkins said she liked living in the home and had installed kitchen cabinets, flooring and other improvements, using her own money.
One day she arrived home to find a letter taped to her door telling her VineBrook had bought the property and was her new landlord. Although the rent remained the same at first, Jenkins said, VineBrook started adding fees. She got out as soon as she could.
“I left in Dec. 2021,” Jenkins told NBC News. “I felt I was being forced out so I ended up purchasing my own home.” She says she recognizes she is fortunate to be a homeowner now. “Once the property is theirs,” she said of VineBrook, “they are free to do with it what they want.”
When they launched VineBrook in 2007, Sprong and McGarry started small, but now their operation is part of the VineBrook Homes Trust, founded in 2018. Rental income at the REIT more than doubled last year, rising to $153 million from $75 million in 2020. Net cash from operations mirrored this performance, rising to $64 million in 2021 from $30 million the previous year.
Sophisticated investors can buy shares in the privately traded REIT; these shares have risen in value from $25 each in 2018 to $54 at the end of 2021, securities filings show.
Sprong and McGarry run the REIT’s management firm, identifying single-family homes to buy, renovate, operate, maintain and lease. This entity receives 1 percent of the purchase price on acquired homes in fees and a sliding property management fee that starts at 8 percent of collected rental income and gradually declines as the revenues rise.
The VineBrook REIT has high-profile board members. They include Arthur Laffer, an economist in the Reagan administration who received the Presidential Medal of Freedom, the nation’s highest civilian honor, from President Donald Trump in 2019. Also on the board is celebrity fund manager Cathie Wood, founder of Ark Investment Management, a group of exchange-traded funds that rocketed during Covid and then cratered. Neither Laffer nor Wood responded to requests for comment about VineBrook’s eviction practices and code violations.
NexPoint Real Estate Advisors is the REIT’s adviser, managing its “business operations subject to the authority of our board,” securities filings show. Wood and Laffer also serve on the boards of NexPoint entities. A spokeswoman for NexPoint did not respond to emails seeking comment.