Investment company buying up Pittsburgh-area houses builds spotty record
PITTSBURGH (KDKA) - You may have gotten a call or a letter in the mail: a cash offer to buy your house even though it's not for sale.
Chances are, it's one of several national real estate companies backed by Wall Street buying up single-family houses by the thousands and turning them into rental units.
While some of these companies say they're fixing up homes and improving neighborhoods, one in particular is getting bad reviews, including claims of shoddy conditions, poor maintenance and non-payment of taxes, all while taking their tenants to court.
Last year, Jeffrey March and his family rented a house in Monroeville and says they immediately encountered a host of problems: mold and chipped paint throughout and a furnace that didn't work.
"They gave us one or two space heaters but one was defective, so we had to go out and buy our own space heaters," March said.
March had a year's lease with a company called Segavepo -- one of several nationwide real estate companies snatching up homes in the Pittsburgh area. In fact, last year, private investors bought close to 4,000 homes in our greater metropolitan area. Among them, was a company called VP Homes, which bought 358 houses in Allegheny County in the past two years and another called Diversified Residential, which bought 97. Both say they're improving the housing stock. As for Segavepo, it bought 173 local homes, but March says this house was in disrepair and they're not responsive to problems, even when rats moved in.
"When I mentioned the rodent problem, they wouldn't come out and fix it so at that point, I had no choice but to move out for the safety of my family," March said.
March and Segavepo are now in court. While Segavepo is suing him for breach of contract, court records show Segavepo has been slow to pay its real estate taxes. There are some 60 judgments against the company for non-payment to the county, several municipalities and school districts. At the same time, court files show Segavepo has been quick to commence eviction proceedings against other tenants -- though several have won judgments against the company for improperly withholding their deposits.
Andy Sheehan: "You have mold, you have leaks."
John Biebrzycki: "You have bad HVAC. You have all those things."
"They would make complaints to the landlord that would fall on deaf ears to the point where a relative of theirs that's somewhat handy came over and fixed a lot of the problems."
Lawyer John Biebrzycki represents another couple who claim even though they took it upon themselves to fix most of the problems with their rental house, Segavepo actually took them to court for damages to the property, which Biebrzycki says were there when they moved in.
"Not only did they keep the security deposit, but they also filed an action with a collection action against them and placed additional moneys with a collection agency to ruin their credit," he said.
KDKA-TV's Andy Sheehan tried to get a response from Segavapo but hasn't been successful. The local attorney representing the company in these actions would not return phone calls. Segavepo is a limited liability corporation registered in Pennsylvania but lists its principal address in care of Magnetar Capital, a hedge fund out of Evanston, Illinois. Its website lists 4,000 rental homes in its investment portfolio. KDKA-TV sent a list of questions to a New York attorney representing Magnetar who replied: "The firm has no comment."
Biebrzycki is representing the couple free of charge because he believes this is a pattern with companies like Segavepo -- in his view milking tenants for a few thousand dollars extra because the sums aren't big enough to get a lawyer.
"At the end of the day, these big companies are relying on that. They're living for that little margin that's just enough to hurt somebody but not enough to get someone to care and that's the problem here," he said.
Late last week, District Justice Ron Arnoni ruled against Segavepo and ordered them to return their security deposit.
