Tenants of private equity-owned single-family homes in Minneapolis are banding together for a long-overdue fix.
When Rachel Jones started renting a single-family home in Minneapolis in 2019, it didn’t take long for the problems to start. Within months of moving in, her basement flooded. under water was Direct electrical wire.
“I don’t need a basement overflowing with electric wires running through the water when I have young children who can go down there,” said Jones, who is a mother of two.
I contacted the company from which I rented their homes – its name is a large corporate entity HavenBrook, now called Progress Residential after several corporate acquisitions.
When Jones asked HavenBrook for help, she had trouble getting to a human. After getting escaped and speaking to four separate people, she was told that an emergency application would be written. Jones assumed that this meant that there was a local person in Minneapolis that the company hired to help her. But days passed without any help or any communication from HavenBrook.
She said she later realized: “An emergency request is being sent like some emails, but they check it very slowly.” A week later, when someone from the company finally called and offered to come help, the water dissipated and the damage occurred. Her questions about preventing future floods went unanswered.
Things didn’t improve for Jones when HavenBrook swallowed up a company called Front Yard Residential, which was later acquired by a company called Pretium Partners in 2020. Pretium, a New York-based private equity firm, is the second-largest corporate owner of single-family homes around The country owns about 600 single-family homes throughout the Twin Cities metro area.
Even with her rent rising hundreds of dollars, Jones says water seeps from the corners of her kitchen floors. After the Pretium failed to resolve the issue, Jones and other North Minneapolis tenants began laying files Rent to escrow, a process whereby courts accept rent in lieu of landlords and then pay it back to tenants if no repairs are made.
Jones began her security payments in March and was given her first two months’ rent by the court. Her rent for May and June is still with the court because the Pretium, which has finally addressed some repairs, is still not fixing the leaky floor. In total, seven tenants of Pretium homes in North Minneapolis have initiated warranty issues.
Tenants say Their hedge fund owner has repeatedly failed to address major issues including mold, lead paint, flooding, insect infestations and electrical problems, leading to health problems for their families. The rental guarantee strategy and other activities in response to Pretium’s neglect and unresponsiveness in Minneapolis represents one of the largest organized campaigns in the country directed at private equity owners of single-family homes. Local Tenant Advocacy Group Inquilinxs Unidxs Por Justicia says that tenants from about half of the 200 Pretium homes in north Minneapolis have attended the organization’s meetings.
They are also the only group of renters in single-family homes who have orchestrated a campaign to put rent as collateral, according to Jordan Ash, campaign and research director at the Private Equity Project.
This month, they’re stepping up their efforts.
On June 17, several dozen tenants of Pretium homes joined the organizers with Inquilinxs Unidxs Por Justicia to A rally was held outside the Pretium office in New Brighton, a suburb outside of Minneapolis.
“No more cockroaches, no more mice, no more landlords getting fat!” The tenants cheered. The crowd held signs reading “No private property rights” and “Black tenants matter,” and recorded photos of their broken pipes and other deteriorating conditions on the building’s exterior facades and windows. One of the tenants, a single father named Jimmy Harris, said the heating wasn’t working once he and his two children moved into their house. A tenant named Ariana said she suffers from depression and anxiety after years of living in a home with neglected repairs owned first by Havenbrook and now by Pritium.
Tenants submitted to the company a list of demands signed by 68 different tenants of Britium Homes in North Minneapolis. These demands include a rent freeze, financial compensation, a promise from Havenbrook to pay all relocation costs, and a right of first refusal if their homes are sold. Pretium representatives declined to speak with organizers at the rally.
Private equity has seen a spending spree, snatching away single-family homes over the past decade. After the 2008 financial crisis, business owners began devouring foreclosed homes, with the help of Fannie Mae and Freddie Mac. By 2016, Fannie and Freddie had sold 95 percent of their distressed housing stock to corporate owners with low-interest loans, According to a New York Times analysis. A report by the Center for Action on Race and the Economy (ACRE) found that corporate property owners now own about 350,000 homes across the country. Britium alone owns 55,000 of these homes. ACRE said rents in single-family homes nationwide increased by 13% between May 2021 and May 2022.
In Minneapolis and St. Paul, 4.1% of single-family homes and apartments were owned by investors in 2021, up from 1.8% in 2006, according to the A report from the Federal Reserve Bank of Minneapolis. The report found that neighborhoods with the most investor-owned real estate also had unusually high poverty rates. As with other forms of private equity, cutting costs and reducing headcount are built into the business model, as companies typically spend huge debts that they have to repay.
Pretium in particular has become infamous for cutting back on basic fixes. A survey by IX of residents of former Havenbrook homes found that 35% had plumbing, leaks, flooding, or other water problems. Some tenants went without heating or hot water for weeks.
In February, Minnesota Attorney General Keith Ellison She sued Pretium and several of its shell companies for failing to keep homes fit for habitation as well as filing repeated evictions in defiance of the federal moratorium on evictions. The lawsuit lists repair requests made by tenants, including a furnace that hasn’t turned on and off for two years, a fallen front door handle, a wild animal inside a tenant’s wall, non-flushing toilets, leaks and a lack of hot water.
The lawsuit also alleges that Pretium misrepresented its business by saying it provides “24×7” and “same day” repair services, when in fact tenants wait weeks for repairs. Between 2015 and 2020, the City of Minneapolis found 960 health and safety violations in Pretium-owned homes, according to the lawsuit. In nearby Columbia Heights, violations reached such a level that the city revoked the company’s rental license. Despite this, Pretium CEO Donald Mullen boasts On the company’s website, organization is “the place where you wake up in the morning feeling good about yourself.”
These tenants of single-family homes in North Minneapolis are among the most organized in the country, says Ash, of the Private Equity Project. “I think the level of regulation is greater, they’ve been in it for about two years,” he says.
A successful strategy for addressing private equity ownership, Ash says, is to intervene when pension funds want to invest in companies. When Minnesota was deciding whether to reinvest the general employee pension fund in Landmark Investment Group – an investor with Pretium – Inquilinxs Unidxs Por Justicia Organized tenants to talk about their treatment at the hands of the company. This led to lengthy negotiations between the tenants and Pretium, although those negotiations ended once the attorney general’s lawsuit began.
In the short term, tenants are looking for better repairs and connections than the Pretium. But two years ago, Inquilinxs Unidxs Por Justicia helped organize another group of tenants High-profile purchase of an apartment building in Minneapolis. Some tenants are now hoping Pretium will be pressured to sell some of their homes to them. At the rally in the Pritium offices, tenants chanted, “Respect, my house should be mine” and “We deserve a piece of the pie, give us all a chance to buy.”
Jones says she pays about $1,259 a month for her home, between rent and service fees. She estimated that if she owned the home, her mortgage and property taxes would come to about $1,000.
Jones’ warranty case is ongoing. “I still talk to my attorney about this case every two weeks,” she says. Since Jones started hanging out with the other tenants, Pretium was quicker to respond to her complaints and it was easier to get a human on the other end of the phone. She also says she feels less isolated in her struggles.
“Connecting with other tenants in this way is life-changing, because you are not alone and we can support each other,” she says. “We can … defend ourselves and ultimately the other people rented from the company’s other property owners.”
Roshan Abraham is the housing reporter for Next City and a former fellow at Equitable Cities. He resides in Queens. Follow him on Twitter at Tweet embed.