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South Euclid woman loses rental home to out-of-state investors

Study: Out-of-town investor home buys have tripled
S. Euclid woman loses rental home to out-of-state investors
Posted at 10:40 PM, Mar 09, 2022

SOUTH EUCLID, Ohio — Julia Bulter can't believe how quickly she lost her South Euclid rental home of 20-years after the house was purchased by a California investment group in Aug. 2020, an issue a new Northeast Ohio study confirms is growing at an alarming rate.

Butler told News 5 the new homeowners told her she and her disabled sister could continue to pay rent and stay on a month-to-month lease, but then days later she was told she had 30-days to vacate.

She said the California company raced to move her out, piling her personal belongings into a storage facility and forcing her to move in with her mother. Butler said it was a chaotic process that caused thousands of dollars in personal belongings to turn up missing.

S. Euclid woman loses rental home to out-of-state investors
Julia Butler had been renting this South Euclid home for 20 years

“After 20-years, that’s a long time in one place, and to lose everything that you have, you know, sometimes I feel like I’m ready to give up,” Butler said. “Taking your furniture, everything you have, and you lose it and you don’t know where to turn to, where to start. All you know is that you’re out and you don’t even know what happened.”

Butler said she filed reports with Euclid and South Euclid police, but said it's difficult to track down the California company that now owns her former rental home, due to the complex transfer of the house through multiple out-of-town LLCs.

A new report released by the Vacant and Abandoned Property Action Council, or VAPAC, confirms Butler is far from alone after the report uncovered home and property acquisitions by out-of-town investors have tripled since 2004.

VAPAC Chairman Frank Ford told News 5 there are good investors coming to Cleveland, but said a growing number of investment groups aren't living up to their obligations and are driving up rental costs, reducing property values, and more.

“I think if we don’t take this seriously, we’re going to have a problem in a few years," Ford said. "We’re going to find ourselves with really destabilized neighborhoods, less home-ownership."

Jayme Lucas Bauer, Development Manager with the Old Brooklyn Community Development Corporation, told News 5 neighborhood sales data is showing out-of-town investors are hitting Old Brooklyn extremely hard over the past few years.

“We have streets that 60 to 70% of the purchases are these LLC transfers, which completely destabilizes parts of our neighborhoods," Lucas Bauer said. “Fifty percent of their properties don’t have rental registrations, they’re working without permits or have code violations. They’re most active in the parts of our neighborhood that have the highest minority populations, the highest poverty, the lowest property values.”

Zach Germaniuk, VAPAC Co-Chairman and Director of Neighborhood Stabilization with Slavic Village Development told News 5 Slavic Village is also being plagued by out-of-town investors who aren't following proper guidelines.

“This is not investment; this is wealth extraction," Germaniuk said. “They’re taking money out of this area in the form of high rents and they’re really just playing Monopoly with our neighborhoods, and they are structured in these LLCs to avoid landing on go to jail.”

Sally Martin, the new Director of Cleveland's Department of Building and Housing, told News 5 she's preparing to fight back with tougher enforcement of Cleveland housing laws and stronger prosecution of local agents in charge of these properties, by better finding out who they are.

“We have a rental registration protocol; we need to be very careful in enforcing that and collecting enough information on that, so it gives us some teeth to go after the people who are really responsible," Martin said. “We need to simplify the rent in escrow process, we need to work with Cleveland Housing Court on that.”

“On the county level, we should not allow properties to be transferred that have a delinquent tax balance, collecting more information on the online sheriff’s sale, so that really gives us a place to go, not just an LLC that takes us nowhere.”

News 5 has made several attempts to reach the California investment company that purchased Butler's rental home, we're still waiting for a response, so News 5 has decided to not yet name the company until we get its side of the story.

Meanwhile, Butler is urging renters who are considering a unit owned by an out-of-town company to do their research on the company's rental record before signing a lease.

“You don’t know who to trust now because it’s a game, everything is about the all-mighty dollar," Butler said. “Please do your research people, do your research."