Cashing in on Cleveland: How foreign investors siphon money out of the city's poorest neighborhoods

CLEVELAND — They're pursuing the American dream — the out-of-state and foreign investors who have gobbled up real estate in Cleveland over the last decade. But more than a decade after the foreclosure crisis, local leaders, renters, and housing experts said this is the new way money is siphoned from Cleveland's poorest communities and the people who live in them.

They said corporate owners push up prices for renters and would-be homeowners while often failing to maintain their properties or respond to tenants' complaints.

"I think all we are is a line on a spreadsheet to them," said Kris Harsh, Cleveland City Council, Ward 13, which includes Old Brooklyn and part of the Stockyard neighborhoods.

Why Cleveland attracts investors

With the help of Frank Ford, Senior Policy Advisor, Fair Housing Center for Rights and Research, News 5 Investigators found business entities, including out-of-state and international investors, now own 13% of Cleveland's residential parcels.

Ford is also part of the Vacant and Abandoned Property Action Council (VAPAC), a group that recently published a study on the impact of real estate investors on Cuyahoga County's housing market.

"People look at Cleveland as an opportunity, but not in a good way," Ford said. "They see the low (home) prices as an opportunity to make a profit."

He said the VAPAC report found home values, particularly on the east side, that collapsed during the foreclosure crisis 15 years ago never recovered, while rents stayed the same.

"This is another tragedy, on top of that one," Ford said.

Who invests in Cleveland

At the request of News 5, Ford delved deeper into housing data collected by the City of Cleveland and Case Western Reserve University.

Using a property's tax mailing address, he found 15,035 out of 112,373 residential parcels in the City of Cleveland are owned by business entities.

We found two-thirds of the properties owned by investors are on Cleveland's east side.

Of those, 7,796 — or 52% — had tax mailing addresses outside the City of Cleveland.

He also found 3,059 business entities listed tax mailing addresses outside Ohio.

Ford found investors who own Cleveland homes from all 50 states, including Washington D.C. The majority were from California (774), Florida (373), New York (365), Nevada (332), and Wyoming (215.)

How investors hide

The data also revealed the owners of 59 Cleveland homes listed international addresses.

There were 25 addresses in Canada, 18 in Israel, seven in Australia, and three in France.

Harsh, who is also a realtor, said, "We used to say that all real estate is local. But real estate is becoming global right now."

Ford said the number of homes owned by investors, including international investors, is likely far higher than the available data suggests, because investors can easily hide who they are.

"They (the owner) could have given a local address, the property’s address," he said. "And they can legally do that," he said.

For example, the owner of a house on Mount Overlook lists the property's address. But the property deed shows a different address. It is in Thailand.

City of Cleveland document provided by Frank Ford

How investors impact renters

Cleveland homes purchased by corporate investors include 4409 Bucyrus Avenue in Old Brooklyn, a house Thomas Norwid has called home for 15 years.

A corporate owner bought the property last year. Soon, he said his new landlord increased rent increased from $475 to $650. With only social security for income, Norwid said he could no longer afford his home.

"The owners need to realize they have to learn the area that they're renting in and what the limitations are of the people that can live there," he said.

Norwid fell behind and received an eviction notice.

"I'm a single old man with social security," he said. "I'm stuck."

How an 'honest Aussie' avoided us

County records show the home's new owner is Willina Downs, LLC.

State records show Willina Downs, LLC is owned by Katherine Weekes.

On both LinkedIn and BiggerPockets, a website for investors, Weekes's description said she hails from Australia and currently lives in Seattle, where she works in marketing for Amazon.

On Bigger Pockets, the description said the following:

"Seeking investment opportunities and networks in the Cleveland area. I'm an honest Aussie, keen to learn through action and am building a real estate portfolio to achieve financial independence. "

We found Willina Downs, LLC owns two additional properties in Cleveland.

News 5 made multiple attempts to contact Weekes. We sent her messages on LinkedIn and Bigger Pockets. We sent three e-mails to an address Norwid provided to us. News 5 also reached out to Rebecca Yingst Price, an attorney listed as the statutory agent for Willina Downs, LLC. No one responded.

How neighborhoods are hurt

Artrice Smith-Lane was not surprised.

"They (investors) act like we're not really reaching out to them," she said. "When we track them down and send notices, they're unanswered."

Smith-Lane is the Community Engagement Coordinator for the Union-Miles Development Corporation. Data shows the neighborhood on Cleveland's southeast side has 1,077 corporate-owned homes, the second-highest number in the city.

She said investor homeowners don't only push up prices for residents. She said they often fail to maintain their properties too, leaving grass uncut and roofs leaking.

"It’s heartbreaking," she said. "They're not really checking in on the tenants to make sure they’re doing what they need to do to keep the neighborhood safe and clean."

A native of the neighborhood, Smith Lane said the quality of the neighborhood has deteriorated since her childhood, with more homes boarded up and in poor condition.

"I would hope that people would come and invest in our community and want to see great things within our community," she said. "Unfortunately it just doesn’t happen that way."

What CLE is doing

To combat the rise of real estate investors, the Union-Miles Development Corporation has been working on strategies to revive residential home ownership in their neighborhood.

Smith-Lane said the UMDC has been buying foreclosed homes, fixing them up, and selling them to local homeowners. The UMDC also created a rent-to-own program to put residents on a path to home ownership.

"The solution would be to bring more local homeowners," she said. "We need people that live in this community to own their homes."

To address the impact of increased investor-owned homes on renters, Cleveland passed a Pay to Stay ordinanceover the summer.

The new city ordinance protects renters by allowing them to stop an eviction if they pay the rent they owe, plus any late fees. Under Ohio law, a tenant can be evicted for being just one day late - or one dollar short - on rent.

"It will mean more people can stay put," Harsh said. "It's an important piece of legislation that’s going to allow folks who find themselves falling behind on their rent to stay past an eviction if they can prove they can get caught up."

He also said, "It’s going to allow people that are qualified for Section 8, whose landlords agree to Section 8, to be able to use that as an affirmative defense in housing court later on."

After Harsh learned Norwid was going to have to find a new home, he helped him secure a Section 8 voucher.

His landlord agreed to accept it.

"This house, it’s not much, but I’m comfortable," Norwid said.

He said he was relieved he would not have to find a new house to call home.

"I'm not asking for the world," he said. "I'm just asking to stay in one place."