This company quietly became a major Milwaukee landlord. What happens now that it's losing millions?

Claire Shanahan walks her dog past the vacant, boarded-up house on West Townsend Street every day. 

“It’s embarrassing,” she said, to own a home down the block. Shanahan, 34, said she fears for her safety and the value of her home.

Since VineBrook Homes Trust — a multibillion-dollar company whose executives are based in Texas — bought the house, Milwaukee building inspectors have fielded complaints of burst pipes and bullet holes. 

The house is one of more than 1,000 single-family homes in the Milwaukee area the company snapped up at a breakneck speed since 2019. In just three years, VineBrook quietly grew to be Milwaukee's largest single-family landlord.

“They’re killing blocks one by one, and they’re forcing the good people out of Milwaukee," said Ald. Lamont Westmoreland, whose district includes dozens of VineBrook homes, including the vacant property on West Townsend.

VineBrook is among the corporate landlords that flocked to Milwaukee in recent years, lured by the city's low home prices and rising rents. Nearly one in five of all Milwaukee rental homes has an out-of-state landlord.

But as economic winds shift, VineBrook and others are retreating.

VineBrook is under financial strain. In the first nine months of this year, the company lost $213.7 million, according to its filings with the Securities and Exchange Commission.

This year, VineBrook also sold off about 1,500 of its approximately 25,000 homes nationwide — including more than 200 homes in the Milwaukee market — and plans to sell more next year, its third-quarter SEC filings show.

Still unknown is how VineBrook's business moves will impact tenants and neighbors in a city still feeling the effects of the subprime mortgage crisis, which saw mortgages extended to home buyers who couldn't keep up with payments.

To better understand VineBrook's impact — and future — in Milwaukee, the Milwaukee Journal Sentinel and Neighborhood News Service looked closely at its financial filings and legal entanglements, spoke with tenants and attorneys and visited VineBrook homes in the city.

Some VineBrook tenants told reporters the company has neglected maintenance at its properties. Shanahan called to complain about the vacant house down the street, but VineBrook never returned her call, she said.

“I’m hoping this isn’t a pattern where homes are just being bought and squandered, knowing we have an affordable housing shortage in this city,” Shanahan said. 

VineBrook put the house near Shanahan's home up for sale more than 100 days ago. A VineBrook spokesperson said in an email that the property is secured, and some repairs were made in May.

The spokesperson said VineBrook has sold homes in Milwaukee for "many reasons," including to shed unwanted properties it picked up in bulk purchases.

VineBrook, a real estate investment trust with single-family rental homes in 18 states, did not make its chairman or executives available for an interview for this story. In a statement, the company said: "VineBrook is proud to be part of the Milwaukee community, and we are committed to breaking down the barriers to single-family living for all Milwaukeeans through access to affordable housing."

VineBrook quietly bought up more than 1,000 Milwaukee homes

VineBrook arrived in Milwaukee in 2019, amid an influx of corporate landlords seeking to cash in on demand for rentals. By the end of 2022, the company owned more than 1,000 single-family homes in the Milwaukee area, according to its SEC filings.

“To the best of my knowledge, no other company has ever come close” to owning as many single-family homes in Milwaukee, said Marquette University Law School research fellow John Johnson, who studies trends in Milwaukee’s housing market.  

VineBrook buys modestly priced homes, which it rents to middle- and working-class families. In Milwaukee, most of VineBrook's homes are clustered on the far north and northwest sides, in predominately Black neighborhoods.

Despite the company's large footprint in Milwaukee, many have never heard of it. The company boasts $3.6 billion in assets, but its local office — tucked into the corner of a nondescript Brookfield office park — gives no hint to its mammoth size. 

The name VineBrook "sounded vaguely familiar” to Mayor Cavalier Johnson, "but he couldn’t place the context,” the mayor’s spokesperson said.

Ald. Mark Chambers, who represents a north-side district where VineBrook bought about 250 homes, also said he recognized the name but knew little about it.  

A tenant finds VineBrook affordable, but unresponsive

Tianya Morton hadn’t heard of VineBrook until she was looking for rental homes online. It wasn’t easy for Morton, a phlebotomist, to find a place within her budget and near her work.  

“I looked and I looked online,” she said in a September interview on her front lawn. “Everything is so expensive.”  

The shortage of single-family homes in Wisconsin has driven up rents and home prices. Deep-pocketed investors can often out-bid other buyers, sweetening the deal with all-cash or above-asking offers, said Sheharyar Bokhari, a senior economist with Redfin.

The four-bedroom VineBrook home Morton rents on North 51st Boulevard, north of Capitol Drive, is close to her job and affordable. She pays about $1,400 a month, she said.  

But the home’s insulation, Morton said, isn’t up to snuff. In the winter, she said, “it gets really, really cold, so you have to jack up the heat."

Morton said she’s struggled to get in touch with VineBrook for maintenance support — something she said online reviewers had warned might happen. When her plumbing wasn’t working, Morton said, she stayed at her daughter’s house for two days while she waited for VineBrook to make repairs.  

"Our records indicate that Ms. Morton’s services requests were responded to within 1-2 days and completed within 1-3 days," a VineBrook spokesperson said in an email.

Just north of Capitol Drive this fall, some VineBrook homes had well-kept lawns and fresh coats of paint, while others showed signs of neglect. Several VineBrook homes had weeds sprouting out of the gutters. 

“I’ve had VineBrook tenants who don’t report any problems with conditions at all, and I’ve had others where (the homes) were falling apart,” said Jill Kastner, an attorney with Legal Action of Wisconsin. Legal Action has represented more than three dozen VineBrook tenants in cases involving evictions, security deposits and housing conditions, the firm said. 

In the few years it’s been operating here, VineBrook has had its fair share of run-ins with Milwaukee building inspectors. The company has been ordered by Milwaukee Municipal Court to pay about $75,000 in fines, many for building code violations. 

Kamille Wooden said she's been renting her home on North 50th Street for about three years — first from a local landlord, then from VineBrook, which bought the property in December 2021. The home already had serious problems before VineBrook bought it, Wooden said. It was infested with bed bugs, and the stairwell flooded every time it rained, she said.

VineBrook tells investors it follows a "value-add" business strategy — meaning it buys houses, repairs and renovates them, then raises rents. VineBrook bought many of its Milwaukee homes in bulk from other landlords.  

Wooden said that right away, VineBrook raised her rent by $50 a month, but the property conditions didn’t improve. Wooden said she and her children have been dealing with mold and infestations of bed bugs and roaches.  

After struggling to get VineBrook to respond to her maintenance requests, Wooden said, she started calling city inspectors. 

In January, Wooden’s heat went out, putting strain on the aging pipes. Sewage began backing up in her basement. Milwaukee’s Department of Neighborhood Services issued an emergency order, requiring VineBrook to restore heat and clean out the sewage.  

In February, Wooden sued VineBrook in small claims court for $10,000, claiming emotional distress. Her home, she said in the suit, was “unsafe, uninhabitable (and) hazardous.” The case is scheduled for trial in January. 

"VineBrook was responsive to Ms. Wooden’s maintenance requests and successfully completed work on the exterior of the home," a VineBrook spokesperson said in an email. "However, we were unable to gain access to the interior of the home after repeated attempts. City code officers were aware of the difficulties experienced in obtaining access to the property due to resident denial. Beyond these details, we cannot comment on pending litigation."

Cincinnati sued VineBrook for creating ‘absolute public nuisance’

In Cincinnati, where VineBrook is a major landlord, officials taken a more aggressive approach with the company.

This year, the City of Cincinnati filed suit against VineBrook and asked a county court to place VineBrook’s properties in a receivership. VineBrook has “created and maintained an absolute public nuisance,” the city charged. 

VineBrook properties in Cincinnati have serious problems, the city says, including mold, lack of heat, and water damage that caused floors to sag.

In its complaint, the city accuses VineBrook of neglecting maintenance on purpose, saying "VineBrook instructs its maintenance staff to withhold certain repairs altogether ... unless and until City Inspectors become involved."

Skimping out on maintenance, the city charges, is key to VineBrook's business. The city says VineBrook buys cheap homes with pre-existing health, safety, and building code violations, then lets those maintenance problems fester.

“VineBrook can milk rental profits from deteriorating housing units for years — then sell or abandon those units once they become uninhabitable,” the city wrote in its complaint. 

This isn't the first time that Cincinnati has taken VineBrook to court. The city sued VineBrook back in 2021, then reached a settlement with the company. In its complaint, the city accuses VineBrook of violating that agreement.

VineBrook has denied the allegations and is fighting the suit.  In a January statement to the Cincinnati Enquirer, VineBrook said, "We disagree with allegations in the City’s complaint and will vigorously defend our company, employees, and reputation."

VineBrook's buying spree stood out in growth of out-of-state landlords

Milwaukee has far more out-of-state landlords than it did before the 2008 recession, and even since the early days of the pandemic.

In 2005, out-of-state landlords owned about 5% of Milwaukee’s rental homes, according to an analysis by Marquette’s Johnson.

By spring 2021, that number had grown to 14%. Today, about 7,200 homes — or 18% — of all Milwaukee rental homes have out-of-state owners. 

Investors from pricier cities “found it incredible that (homes in) a whole ZIP code — a whole part of the city of Milwaukee – could be purchased a few years ago for under $120,000,” said Graig Goldman, a longtime Milwaukee Realtor and CPA.

To get their hands on those homes, many investors loaded up on debt during the pandemic, a time when interest rates were at record lows.

From 2018 to 2022, VineBrook went on a debt-fueled buying spree, picking up about 25,000 single-family homes across 18 states. For a long stretch of the pandemic, VineBrook was buying dozens of Milwaukee homes every month.

As VineBrook bought more homes, its investment advisers earned more in fees.

NexPoint Real Estate Advisors V, a company affiliated with a large Dallas investment firm, is VineBrook's asset manager. VineBrook paid NexPoint $3.3 million in 2020, $8.3 million in 2021, $16.1 million in 2022, and accrued another $16.3 million in advisory fees in the first nine months of this year, according to its SEC filings.

In 2021, when borrowing was cheap, VineBrook managed to turn a small profit. But as interest rates began rising in spring 2022, the company’s heavy debt load began dragging down its bottom line.

Nonetheless, VineBrook kept buying homes and taking on more debt well into last year. In August 2022, it agreed to buy nearly 3,000 single-family homes from a Miami-headquartered private equity firm. That deal fell apart by January, and VineBrook forfeited more than $40 million in deposits. 

Last year, VineBrook lost nearly $50 million. It lost another $213.7 million in the first nine months of this year, according to its SEC filings.

In its most recent SEC filing, VineBrook said it intends to buy and renovate additional homes, depending on available financing. If needed, VineBrook said it intends to refinance existing debt, borrow additional dollars, or raise more money from investors.

Growing concern about large landlords in Milwaukee

Many commercial mortgages will come up for renewal within the next few years, meaning more landlords will likely feel the sting of rising rates soon, if they aren't already.

"I think you're going to see more and more of this," Goldman said.

The growth of VineBrook and other large landlords in the city has many tenant advocates and politicians concerned.

"It's awful," Ald. Westmoreland said. "They're not vested."

Westmoreland said property neglect by corporate landlords can make residents "feel like they're losing control of their neighborhoods" and want to leave. And when residents do leave, he said, "that opens up an opportunity for another investor to buy the house that they're selling."

“When wealthy out-of-state investors buy up hundreds of properties to turn a quick profit, Wisconsinites that live and work in our communities can be locked out of affordable home ownership,” U.S. Sen. Tammy Baldwin said in an October email to the Journal Sentinel, adding:  “We must do more to ensure companies like VineBrook Homes are not incentivized to dominate rental markets.” 

Baldwin and seven of her Democratic colleagues this year co-sponsored the Stop Predatory Investing Act, which would remove tax incentives for investors buying homes in bulk. 

In a statement, VineBrook said it's "providing Milwaukee’s residents with stepping stones to homeownership, including the opportunity to build equity with the purchase of our affordable homes or access to single-family rentals with average monthly rents that are normally well below nationally recognized benchmarks for affordability."

Neighborhoods changing to be 'all renters'

Fred Branch, 85, has seen a lot of changes in the nearly 35 years he has lived on the 4300 block of North 41st Street.  

“When I moved in, it was all owners,” Branch said, peeking out his front door. “Now it’s all renters.” 

Branch’s neighborhood, like many in Milwaukee, was hit hard by the subprime mortgage crisis, when foreclosures pushed many residents out of their homes. VineBrook bought six houses on Branch’s block, including the home next door. 

In mid-October, that VineBrook home had a bright orange eviction notice from the sheriff’s office on the front door. Below, the stoop was covered in shards of glass from the storm-door window, which had been shattered for months. There were two apparent bullet holes in the picture window.   

These days, Branch said, he doesn’t know much about his neighbors. 

“They’re gone, then another one comes,” he said. 

PrincessSafiya Byers of The Milwaukee Neighborhood News Service contributed to this report.

Cary Spivak can be reached at 414-550-0070 or cspivak@jrn.com. Genevieve Redsten can be reached at gredsten@gannett.com.

The Milwaukee Journal Sentinel and Milwaukee Neighborhood News Service received support from the Poynter Institute for this story through funding from the Omidyar Network. The Poynter Institute and Omidyar Network played no role in the reporting, editing or presentation of this project.