Wall Street buys hundreds of homes in Pittsburgh area, turns them into rentals
PITTSBURGH (KDKA) — After the death of big steel, Mon Valley towns like Homestead and Munhall are finally making a comeback, attracting young families to restore houses and call the area home.
But they've also attracted a number of big corporate buyers who've been scooping up houses by the dozen and turning them into rentals.
"I don't think it's a positive impact," Munhall Borough Manager Seth Abrams said. "They're taking housing away from potentially younger families."
In recent years, limited liability corporations, hedge funds and private equity firms have bought up hundreds of thousands of houses across the country and turned them into rental units. In Allegheny County, out-of-state buyers have snatched up more than a thousand houses primarily in the eastern suburbs — not dilapidated but not high-end — prime candidates for first-time buyers.
"Houses for people who are first-time home buyers in a Munhall, West Mifflin, Penn Hills," said Sabina Deitrick, associate professor of urban affairs and planning at the University of Pittsburgh. "A house that might be going for $110,000, $150,000. They're paying cash and their taking those houses off the market for other homebuyers who are typically first-time home buyers who want to live in the house they're buying.
In Allegheny County, Vinebrook out of Ohio has bought 453 houses, Segavepo LLC of Tampa, Florida has purchased 244, SFR3 of California has bought 206 homes and Diversified Residential Homes from various states has bought 146 houses.
Generally, the companies make some minor repairs and put them on the rental market.
But while some companies say they are doing right by communities by restoring houses, Andy Randza says the rehab of his rental house in Canonsburg by Segavepo is surface only. He found out this winter that the cold air seeps through the floorboards.
And while they were promised a finished basement, they have wall heaters that don't to the job. He and his partner tried to set up an office in the basement but it is too cold to work. They've repeatedly called Segavepo, but only once did it send a maintenance crew who told them there was nothing they could do.
"They're down in Tampa, Florida where it's 80 degrees," said Randza. "We're here and it's 20 below zero."
KDKA Investigates has received a half dozen maintenance complaints by renters about Segavepo, and Deitrick of Pitt's Urban Center of Social Research says the companies generally don't have a local maintenance crew.
"That's part of their business model," Dietrick said. "Cut out the labor. There's no superintendent, there's no maintenance person, there's no one that they know is going to be around."
According to incorporation records, Segavepo is owned by Magnetar Capital, an Illinois private equity firm that boosts more than $13 billion in assets, including some 4,000 houses across the country. But despite all that wealth, in Allegheny County, Segavepo is a tax scofflaw.
The county, municipalities and school districts have filed more than 130 liens against Segavepo for non-payment of its real estate taxes. Abrams said under state law, Munhall will stop Segavepo from buying any more houses and demand it pays up.
"Since they've now been delinquent long enough, we're going to prevent any further occupancy permits from being issued," Abrams said. "But otherwise it's up to the delinquent tax collector to get them up to speed and bring them into compliance.
KDKA-TV reached out to Magnetar Captial, which owns Segavepo, and it had no comment on these complaints.