When Investors Buy Up the Neighborhood: Preventing Investor Ownership from Causing Neighborhood Decline

In collaboration with the Northwest Area Foundation and Policy Link, Family Housing Fund helped create this report in response to the foreclosure crisis of the late 2000s. Low-income people and people of color were disproportionately targeted for subprime mortgages and were worst hit by the crisis. Large, national investors subsequently bought up much of the foreclosed homes at a steep discount. 

These communities witnessed investor behavior that negatively impacted their neighborhoods, including several extractive business models: Buy low, make cosmetic fixes and sell quickly at higher rates. Buy, hold, and rent without making improvements. And buy and hold to resell later when the market improves. 

This report analyzes the impact of large rates of investor ownership and recommends three key strategies to prevent neighborhood decline due to irresponsible property owners: encourage homeowners or responsible investor owners to buy, rehabilitate, and maintain foreclosed properties; gain control of foreclosed properties; and hold property buyers accountable for property condition. 

Policy Link held community meetings in St. Paul and Minneapolis to share these results and recommendations. Download the presentation.

A tool for assessing existing and potential strategies to prevent irresponsible investor ownership was created to accompany this report.