Jessica Moreno walked up the short concrete driveway, a small group of canvassers close behind, and rang the smart doorbell at 8237 Ainsworth St. in a neighborhood near Northlake Mall.
She’d had no luck at the first two houses she tried. But at the tidy two-story home, Bekai Cole came to the door willing to chat.
Moreno, a housing justice organizer with Action NC, asked Cole if he’d been having problems with his landlord, Progress Residential.
Cole, who said he’d lived in the north Charlotte house for a few years, mentioned that his rent had been steadily increasing, about $150 per month each year.
Rising rent is the most common complaint she hears from tenants of corporate landlords, like Progress Residential, Moreno said. That and them not responding to maintenance requests.
Cole said he’d found Progress to be “pretty fair” when it came to addressing any maintenance issues he’s had, but the rising rent has left him concerned enough that he agreed to join an upcoming Zoom meeting to hear about joining a tenants union.
Action NC has been canvassing neighborhoods like this for about a year, steadily signing people up for a national tenants union to challenge institutional-investor landlords. In the space of a decade, the biggest of these companies have gone from owning few homes to being the largest single-family landlords in North Carolina, based on an analysis by The Charlotte Observer and The News & Observer.
Action NC has so far signed up around 200 tenants in North Carolina to the national union, which has about 2,000 members, Moreno said. Once organized, tenants can collectively fight rent increases and maintenance issues, she said.
“These companies are gobbling up these houses and not giving first-time homebuyers a chance,” Moreno said. “People are upset and they don’t know there’s a group fighting.”
The investigation found that about 20 corporate landlords have scooped up more than 40,000 single-family homes in North Carolina. That includes 25,000 homes just in the Charlotte area, which has become one of the national hot spots for the industry. On Ainsworth Street alone, these companies own at least 24 houses.
Institutional investors achieved this scale — they now own a quarter of rental homes and 5% of all homes in Mecklenburg County — by buying houses for depressed prices in the wake of the Great Recession then leveraging those portfolios in recent years to outcompete traditional homebuyers. This investigation also found that they have created systems to maximize profits from tenants and are altering some neighborhoods in North Carolina.
In the 10 years that institutional investors started buying in Charlotte, they’ve met little resistance from local leaders, who say they remain at a loss for how to check the growth of the industry.
So far, the only action in North Carolina has come from grassroots efforts.
HOAs push back
A few doors down on Ainsworth Street, Moreno and a canvasser knocked on Thomas McGrath’s door.
McGrath is becoming a rarer specimen on the block: a homeowner. He told Moreno that he’s lived at 8332 Ainsworth for 18 years. Recently, it’s been impossible not to notice the corporate landlords coming in, he said.
“That’s horrible,” McGrath said about these large companies buying up homes on his street. “I know there’s a situation with affordable housing” in Charlotte.
Despite not being a renter, McGrath readily signed up to get more information about the tenants union. He also told Moreno that he’d find out if she could come to the next homeowners association meeting.
A tenant organizer attending an HOA meeting might sound like a waste of time. But in Charlotte, HOAs have been just about the only ones able to slow the encroachment of institutional investors.
The Observer reported in October that several communities in north Charlotte — a part of town where large investors have been especially active — have used their HOAs to discourage corporate landlords from buying in.
Homeowners in the Potters Glen neighborhood, a community of 278 single-family homes off West Sugar Creek Road in north Charlotte, tweaked their bylaws in 2019 to require that new buyers live in their homes for two years before renting them out.
Vincent Evans, president of the Potters Glen Community HOA, told the Observer that most complaints in the neighborhood, like excessive noise, neglected property repairs or criminal activity, were coming from rental houses.
Other HOAs have taken similar steps to discourage investors, including Avalon at Mallard Creek Townhomes and Highland Creek, one of the largest subdivisions in the entire state.
“A corporation won’t live here for a year before renting,” said Apryl Lewis, a housing justice organizer who works with Moreno at Action NC, about these policies.
Tim Sellers, a longtime Charlotte attorney whose firm works with HOAs, said the rise of corporate landlords in the state has led many community organizations to reconsider their bylaws.
Some HOAs have set a cap on the percentage of houses that can be rented within a neighborhood at any given time, but Sellers said that restriction is often difficult to manage. So many HOAs have turned to preventing new buyers from renting their homes for a year or two.
“That makes it completely unappealing to an institutional investor,” Sellers said. “Because why would you acquire a housing unit where you can’t do with it what you want to do?”
Sellers said his law firm has worked with 20 to 25 HOAs that have passed some sort of policy to curb rentals.
Corporate landlords oppose HOAs taking action to restrict rentals in their neighborhoods.
“I don’t think a homeowners association should be able to say you as a homeowner cannot rent,” said David Howard, executive director of the National Rental Home Council, a trade group that represents many of the largest corporate landlords. “I think that’s a slippery slope. And I think it’s not fair to helping consumers.”
Howard said his organization has been successful in passing legislation in Florida, Georgia and Tennessee that bars HOAs from restricting homeowners from renting out their houses.
Sellers, a Charlotte city councilman in the 1990s, said he’s opposed similar legislation in North Carolina, which has yet to pass.
But HOAs alone won’t be able to make a real dent in the growth of the corporate landlords. They’re hyperlocal and many neighborhoods don’t have them.
And with institutional investors continuing to buy across North Carolina, some are calling on lawmakers to step up.
Complaints to the city
Corey Sefers, who’s been a Realtor in Charlotte for close to six years, decided it was time to stop complaining to those close to him about the housing market changing before his eyes. He had to inform the people who could presumably do something about it.
So a little before 8:15 on a February morning, Sefers began typing a message to Charlotte Mayor Vi Lyles, city council members, county commissioners, Gov. Roy Cooper and others. He even included the county sheriff.
The email subject got right to the point, “Hedge Funds/LLC’s Purchasing Residential Real Estate is Killing the American Dream.”
In his email, Sefers laid out an issue he had seen unfolding before him: That large institutional investors like American Homes 4 Rent and Invitation Homes were buying up homes by the thousands and turning them into rentals. Investors were typically buying homes in the $200,000 to $400,000 range, where first-time homebuyers typically look, he wrote.
Those buyers were being pushed out of the market as they couldn’t compete with all-cash offers well above the listing price, Sefers warned. Many homebuyers who don’t have the means to put down loads of cash can feel at risk, especially during the appraisal process. If a home doesn’t appraise to what the offer is, the buyer can risk losing thousands of dollars in what’s known as due diligence fees.
In most cases, there is no appraisal when an all-cash buyer is involved so a seller could be more inclined to go that route, Sefers told the Observer in an interview. He views the appraisal process as “backward” as it can take two weeks after an offer is made to find out whether the home was appraised or not.
“Either the appraisal process needs to change so these owner-occupant buyers can be more competitive or legislation needs to be drawn to limit this or end these corporate buyers from playing with residential real estate,” Sefers wrote.
He ended the email this way: “I may be just one voice but I have heard much concern throughout peers in my industry, along with buyers themselves.”
Sefers does not believe these large, corporate investors have a place in residential real estate, he told the Observer.
“If you’ve got billions of dollars backing you, go buy commercial real estate,” Sefers said. “Not homes the average person needs to live in.”
Concern, but little action
Sefers did get responses, but no solutions.
Lyles replied via email that morning, saying she had recently heard similar impacts to first-time homeowners during a meeting with a panel of housing advocates. She said the city council was committed to supporting home ownership and that she would forward his email to a committee that deals with displacement and gentrification.
“There are existing ways to address this, unfortunately, those put the burden on neighborhood organizations,” Lyles wrote to Sefers. “And the major obstacles noted by the housing panelists are regulatory hurdles.”
Sefers also got a voicemail from the office of Republican U.S. Sen. Thom Tillis.
A staffer, who didn’t leave a name, explained that Tillis has heard the issue from constituents. There have been some hearings on the topic as well as proposed legislation, the message said.
“We’re certainly taking a hard look at that and recognize that the incredibly hot market right now and institutional investment may prevent… homebuyers from being able to access a home,” the staffer said in the voicemail.
These responses are representative of the reaction from local officials when pressed about corporate landlords: Plenty of concern to go around, but no concrete proposals.
At a meeting in April, the Mecklenburg Board of County Commissioners began discussing how to mitigate the impact of institutional investors on local communities. Many commissioners acknowledged a problem and said they’re getting more and more complaints on the issue from constituents.
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“They’re not people who are going to be involved in the community,” Commissioner Pat Cotham said about corporate landlords during the meeting. “They’re not going to see the problems or even care about the problems. It tends to hurt the competition (for buying homes) because these are cash offers and it doesn’t involve building wealth.”
George Dunlap, chairman of the board, said he wasn’t convinced the county had the authority to do much of anything about corporate landlords, other than work with the city to support HOAs and educate the public about the industry.
“I know you guys want to do what the community wants you to do,” Dunlap said. “They are raising Cain. The reality is, you can’t do it.”
At the end of the meeting, all commissioners could do was ask county staff to continue researching the problem and report back with findings. Not all commissioners were pleased.
“It’s unacceptable to our constituents and the residents of Mecklenburg to say we can’t do anything about it,” Commissioner Mark Jerrell said. “Frankly, this is disgusting."
The city has been similarly heavy on interest, yet light on action.
“It’s very concerning, simply because we’re dealing with this whole affordable housing crisis,” Councilman Malcolm Graham told the Observer about the growth of corporate landlords. “And this adds to that because it takes away homes from the market, from that individual in the market who is looking for that first home.
“The question for government is: Is this in the best interest of neighborhoods? And I would probably say no. The question is then what can we do?”
So far, it’s a question with no answer.
Mayor Lyles did not answer questions for this story, despite multiple attempts to reach her through her spokesman, Jeremy Mills, who pointed reporters to the city’s housing department.
Shawn Heath, Charlotte’s interim director of Housing and Neighborhood Services, said the city views corporate landlords as part of a bigger problem around affordable housing.
“I think the emergence of these corporate investors are a contributing factor to the problems we’ve been seeing,” Heath said. “Clearly it’s something that’s on the radar for us as a department. It’s something we’ve talked about considerably over the past few months.”
But the city’s proposed solutions to its affordable housing woes — construction of additional affordable units and increased down payment assistance, among other measures — aren’t exclusively aimed at addressing corporate landlords, he said.
As long as institutional investors are buying houses with cash, and willing to pay more than the asking price, additional down payment assistance won’t erase the competitive disadvantage most homebuyers face. And the affordable housing units the city wants to see more of are aimed at people making less than 80% of the area median income, while corporate landlords offer houses at higher rents.
Heath said so far the housing department has not received any mandate from city council to focus on institutional investors, though he added that he believes the city is committed to tackling the issue. Like county officials, Heath mentioned the city is interested in working with HOAs and educating the public about corporate landlords.
“We, the city, are very much leaning into housing as an area of great emphasis,” he said. “If we can get it right, it will level the playing field. These are huge challenges created over multiple generations.”
‘People are trying’
Charlotte is far from alone in being unprepared to deal with the rise of institutional investors.
Aside from a couple of anomalies that are unlikely in a state with less regulation like North Carolina — like rent control laws — no state or local government has devised a way to regulate corporate landlords.
In the April presentation, Monica Allen, Mecklenburg County’s director of strategic planning and evaluation, told county commissioners that she had gone looking for solutions across the country and returned with few.
“Sadly, when we scanned the nation, we didn’t really find, especially in larger markets, we didn’t find that these communities are doing anything,” Allen said.
Researchers and experts are also unsure of the best way to regulate an industry that’s still relatively new in the single-family home rental business.
Most agree that it’s unlikely in the United States you could prevent a willing buyer from purchasing a house from a willing seller. Housing researchers also agree that some regulation is necessary.
“It doesn’t feel particularly sustainable,” said Desiree Fields, a professor at the University of California, Berkeley, who has studied the industry for a decade. “The inequalities of the landlord-tenant relations taken to next levels are frightening."
“It’s very difficult for the tenants themselves to reach back to the landlord. I think there’s just a way that it magnifies these power imbalances.”
But until some sort of check is put in place, the fight is left to HOAs and activists.
On that warm and sunny Saturday last month, Moreno and Lewis — and their team of four canvassers — spoke to more than a dozen renters on Ainsworth Street in north Charlotte.
Door-by-door, they signed up three people to come to a meeting to hear more about joining the union of tenants pushing back against institutional investors.
After that meeting there will be more doors to knock, especially as corporate landlords continue buying.
“The hardest part is what we’re doing,” Lewis said, carrying a grocery bag full of bottled water and cups with ice for her colleagues.
“You gotta knock on doors and let people know that people are trying.”
Security for Sale was reported and written by investigative reporters Payton Guion of The Charlotte Observer and Tyler Dukes of The News & Observer, with significant contributions from Observer growth reporter Gordon Rago. Additional reporting by News & Observer real estate reporter Mary Helen Moore. | Art direction and animation by Sohail Al-Jamea | Illustrations by Rachel Handley | Design, development & interactive maps by David Newcomb | Photos, drone footage and videos by McClatchy visual journalists Jeff Siner, Khadejeh Nikouye, Melissa Rodriquez, Travis Long, Julia Wall, Alex Slitz, Loumay Alesali, The’ Pham and Scott Sharpe. | Edited by Cathy Clabby, McClatchy Southeast investigations editor, and Adam Bell, Observer business and arts editor. | A special thanks to the Pulitzer Center, which supported this project with a data journalism grant.