Report: Corporate landlord and shareholders get rich off Northside tenants
Keela Hardge said landlord fees make it challenging for her to save money to buy a home. Photo by David Pierini
By David Pierini, Editor
The rental house in the 4000 block of Fremont Avenue North was advertised for $1,375 a month. Keela Hardge said she rarely writes the rent check for that amount. The landlord, Progress Residential, demands more.
There are fees for each of her two dogs, a fee for late rent and another $30 when she uses a debit card not associated with the bank account on file. There are also unexplained service fees that show up.
Unemployed and fearing eviction during the pandemic, Hardge said she paid her rent instead of her water bill. The city switched the bill back to Progress Residential, which charged her a monthly fee for that and continued to charge her even after she paid off her debt and resumed payments in her name.
“I work two jobs and still live check to check,” she said. “When my rent fluctuates between $1,700 and some odd dollars or $1,800 and some odd dollars that creates a hardship for me. I changed the bill back into my name in May and they’re still tapping into my rent.”
Progress Residential, a subsidiary of a New York-based private equity firm, owns more than 200 homes in North Minneapolis and has profited handsomely over the years from tenants like Hardge.
A new report by the Private Equity Stakeholder Project and Inquilinxs Unidxs Por Justicia/United Renters for Justice claims Progress Residential has extracted more than $40 million from the historically Black neighborhood. Add the other rental properties owned by Progress in Hennepin County and the amount reaches $60 million, according to the report.
Pretium did not return a request by North News for comment.
Northside tenants for years have complained about fees and rent increases in homes that in many cases are unsafe to live in. At one point, Progress had 378 open violations among its 215 Northside homes. Tenants organized, brought their stories to investors, place rent payments in escrow and got the attention of the state attorney general office, which filed a lawsuit.
North News covered the tenants’ fight for justice throughout 2022, including a story that January that highlighted the experiences of renters living with mold, crumbling foundations, shoddy flooring, electrical issues and unresponsive management.
“The Northside is where I am from. I grew up here, it’s where I went to school and where I have been raising my children and it’s where I prefer to buy my own home. But with Progress and (companies) like that, buying up all of the homes, it makes it harder for me to purchase something in my own community. If they would just get out of my city, I wouldn’t be so upset.”
Progress Residential was forced into a two-year agreement with the City of Minneapolis earlier this year to make repairs and be better landlords or risk losing its rental license. About 130 of the Northside homes are now vacant. Progress moved some tenants into homes it owns in the suburbs in order to make the repairs.
Organizers say they've seen little evidence progress has made changes that improves its tenants living conditions.
“I think the report is validating,” said Samantha Pree-Stinson, a Northside organizer for United Renters for Justice. “We’re not crazy, we’re not making things up. It’s good to see it in print and be tied to data.”
Buying a home is one of the most common ways for a family to accrue and pass on wealth to the next generation. It provides “financial stability through predictable expenses and (fosters) savings through the growth of home equity,” the report authors said.
Minnesota has one of the nation’s biggest racial wealth gaps. Three out of every four white households in Minnesota own their homes. For Black households, its one out of five.
How can one landlord extract millions in wealth?
According to the report, Pretium Partners formed Progress Residential (formerly Front Yard Residential) in 2012 at the peak of foreclosures during a four- year housing market crisis.
The group bought up thousands of homes across the country in low-income communities of color and with 90,000 rental homes, Pretium is the largest single family rental company in the U.S.
Corporate landlords take affordable homes off the market and keep homeownership out of reach for low- to moderate-income families.
The Northside homes in Pretium’s portfolio on average have since doubled in value, the report said.
Of the 215 homes in North Minneapolis owned by Progress Residential, about 130 are vacant according to Inquilinxs Unidxs Por Justicia/ United Renters for Justice. Pictured is one of four small Progress homes on Humboldt Avenue North that are vacant. Photo by David Pierini
Then there are the fees. If rent is not paid on time, tenants are charged 10 percent of the rent. Two or more times and Progress reserves the right to increase the fee.
There is also a $40 fee if Progress has to post a notice to pay rent and a $100 fee to change the lease by adding a person or pet. A $200 eviction administration fee, a $75 fee to have a maintenance person come to the house for repairs and a $300 nonrefundable fee per pet, plus $35 each month per pet.
“There are fees that traditionally are not part of a standard lease,” said Jordan Ash, housing director for the Private Equity Stakeholder Project. “That’s one of the things that’s unique about private equity landlords. They’re going to supersize the profits and promise investors very large returns in a short period of time.
“They’re not just content with making money. They want to make lots of money.”
Keela Hardge is working with the non-profit BuildWealth MN to get financially ready to shop for a home in North Minneapolis.
For one thing, she would like to have a place to hang family pictures. She hasn’t hung any pictures, afraid Progress will charge a fee for each nail hole in the walls.
“The Northside is where I am from,” Hardge said. “I grew up here, it’s where I went to school and where I have been raising my children and it's where I prefer to buy my own home. But with Progress and (companies) like that, buying up all of the homes, it makes it harder for me to purchase something in my own community. If they would just get out of my city, I wouldn’t be so upset.”