Security for Sale
Entry type: Single project
Country/area: United States
Publishing organisation: The Charlotte Observer, The News & Observer
Organisation size: Big
Publication date: 2022-05-01
Authors: Tyler Dukes, Payton Guion, Gordon Rago, Cathy Clabby, Adam Bell, Sohail Al-Jamea, Rachel Handley, David Newcomb, Jeff Siner, Khadejeh Nikouyeh, Melissa Rodriguez, Travis Long, Julia Wall, Alex Slitz, Loumay Alesali, The’ Pham and Scott Sharpe
Tyler Dukes is an investigative reporter at The News and Observer. Payton Guion was an investigative reporter at The Charlotte Observer until January 2023. Gordon Rago covers growth and development for the Observer.
The project featured art direction by Sohail Al-Jamea, illustrations by Rachel Handley and front-end development by David Newcomb.
Visuals were captured and produced by McClatchy journalists Jeff Siner, Khadejeh Nikouyeh, Melissa Rodriguez, Travis Long, Julia Wall, Alex Slitz, Loumay Alesali, The’ Pham and Scott Sharpe.
The project was edited by Cathy Clabby, McClatchy Southeast investigations editor, and Adam Bell, Observer business and arts editor.
We dug into property records to uncover the scale and impact of the single-family rental industry in North Carolina.
We found that, in the space of a decade, corporate landlords had gone from owning nearly zero houses in North Carolina to owning more than 40,000. In Charlotte, these companies own one out of every four rental homes, putting pressure on would-be homeowners and tenants alike.
Our reporting revealed a business model designed to squeeze every drop of profit out of renters. And we demonstrated how both federal policy and state pension investments fueled the industry’s rise.
Until our project, there had never been an accurate count – much less precise geospatial data – on corporate ownership of single-family housing in any U.S. state.
Months of tedious data work allowed reporters to lift this veil of obscurity and answer critical questions for the first time, revealing stories about the single-family rental industry’s growth, its impact and the expanding number of people affected by it.
David Szakonyi, an assistant professor at George Washington University and co-founder of the Anti-Corruption Data Collective who reviewed our findings, called the project the “best exercise I’ve ever seen trying to identify properties owned by large institutional investments.”
Our reporting prompted swift reaction. A virtual town hall to answer reader questions attracted hundreds of live viewers. Raleigh’s mayor pro-tem [called for action](https://www.newsobserver.com/news/local/counties/wake-county/article261036377.html) from the city council. Mecklenburg County officials [pledged half a million dollars](https://www.charlotteobserver.com/news/local/article261634477.html) to study the problem and [pushed for federal action](https://www.charlotteobserver.com/news/local/article264692029.html). Rep. Alma Adams, D-N.C., [entered our investigation into the Congressional record](https://www.charlotteobserver.com/news/state/north-carolina/article261378217.html) and announced that she was authoring related legislation. A national watchdog group cited our work [in a call](https://www.newsobserver.com/news/state/north-carolina/article268767412.html) to end state pension fund investments in the largest corporate landlord’s major private equity backer.
Because we published [our data and methodology](https://github.com/mcclatchy-southeast/security_for_sale), as well as [a toolkit for reporters](https://mcclatchy-southeast.github.io/sfr-toolkit/), newsrooms around the country could uncover the scale of corporate landlords in their backyards. Our work aided and inspired new and in-progress reporting in [California](https://www.sfchronicle.com/about/newsroomnews/article/Year-long-Chronicle-data-project-reveals-who-owns-17453051.php), [Kentucky](https://www.leoweekly.com/2022/08/a-corporate-landlords-takeover-spotlights-racial-inequities-and-displacement-fears-in-west-louisville/) and [New Jersey](https://www.app.com/in-depth/news/local/how-we-live/2022/08/25/nj-real-estate-housing-market-prices-investors-llc-newark-asbury-park/9793039002/); and Law360 used our toolkit [in a six-part series in Arizona](https://www.law360.com/articles/1541888?scroll=1&related=1).
Our reporting also prompted researchers to further study the impact of corporate landlords. Two, from Princeton and the University of Pennsylvania, are studying the rise of institutional investors in rental housing, and they’re basing their research in Charlotte largely because of what we revealed there.
Although there are just a handful of national corporations buying on a large scale across the state, they use a myriad of subsidiaries and holding companies to conduct business. There’s also variation – misspellings, mixed punctuation and the like – in how these subsidiaries are recorded in property records, making simple counts and matching impossible.
We got around this problem by creating an expansive lookup table of more than 1,600 name variations that link back to just 22 companies.
We first cleaned and manually scoured property records to create a database of parent companies and their most common subsidiaries, which can often be connected by naming convention, corporate mailing address and company officials. We then used that list to create a machine learning model to find other name variations.
Data pulled from eviction proceedings, scraped from utility records and matched against corporate registration data from the nonprofit OpenCorporates was used to add more names.
Almost all subsidiaries identified by the N&O and Observer’s reporting were matched – either with statistical software or manually – to corporate registrations filed with the N.C. Secretary of State’s Office to verify their ties to specific parent companies.
We then used statistical software to match the list of investor subsidiaries with property owner names recorded by the North Carolina OneMap, a state project through the N.C. Geographic Information Coordinating Council to collect and publish property parcel information from all 100 counties in the state.
Data scraping, cleaning, matching and analysis was all completed in R and RStudio.
Our two main datasets – a lookup table of subsidiaries tied to parent companies and a table of more than 40,000 properties with corporate ownership and geospatial coordinates – were published via Git and GitHub alongside a detailed methodology and toolkit for reporters looking to replicate the work.
Context about the project:
We started reporting this story in November 2021 after real estate sources told us that corporate landlords were upending Charlotte’s real estate market. We immediately began hearing stories about how these institutional investors, armed with piles of Wall Street cash, were hoovering up single-family homes, pricing out homebuyers and charging premium rent to tenants. We quickly found that their business model was designed to squeeze every drop of profit out of their houses, often to the detriment of tenants.
What we didn’t know was the scale of the industry in North Carolina. So we dove into data to identify the biggest corporate landlords and their most common subsidiaries, which we linked using naming conventions, corporate mailing addresses and company officials listed in business formation documents, along with other state filings. We used that list to create a machine learning model to find other name variations. We supplemented our list of subsidiaries and holding companies with data from other sources, including the UNC-Charlotte Urban Institute, MIT researchers, court eviction proceedings, state utility records and the nonprofit OpenCorporates.
By unraveling the true ownership of hundreds of subsidiaries and holding companies, we identified the largest single-family landlords. With that, we used county-level and statewide property records databases to count how many homes these companies owned across North Carolina, a figure not previously known. We discovered that about 20 corporate landlords owned more than 40,000 houses in North Carolina, including a quarter of the rental homes in the Charlotte area.
Once we knew the scale, we wanted to decipher how these businesses work and affect people in our communities. Our reporting turned up neighborhoods where the companies owned a significant percentage of houses; first-time homebuyers without a hope of competing against Wall Street money; a new financial instrument created by these investment firms to rake in more money; and tenants living in filth because their landlords prioritized profits over people. We captured the industry’s origin story during the Great Recession by tracking changes on deeds from one local subdivision. That made plain how the federal government unleashed the industry by changing rules to allow investors to scoop up many foreclosed residential properties at one time.
On May 1, we published the first installment of a three-day series called Security for Sale. In addition to all described above, we reported that local and state officials, despite receiving complaints, do nothing to constrain the industry. In fact, the state pension plan is an enabler, investing millions in the industry’s rental-backed securities. Other stories explained tenants’ rights and the fragility of local governments’ strategy of depending on homeowners associations to slow the industry’s growth.
Transparency was at the core of this project. Upon publication, we made both our methodology and the data powering our investigation public to allow journalists, researchers and the public to investigate corporate homeownership themselves. We’ve also published a detailed toolkit with resources and walkthroughs to help journalists use our data and code to replicate our investigation for their own cities and states.
What can other journalists learn from this project?
The rise of the single-family rental industry is not unique to North Carolina.
You’ll find these companies in almost every state, but their spread is concentrated most wherever there’s a competitive housing or rental market. That makes this story ideal for local reporters, who are best positioned to detail the impacts on their communities on the ground level.
Not all of the lessons learned during the Observer and N&O’s six months spent tracking and documenting large single-family rental companies in North Carolina will apply to every market. But because this industry has standardized the way it buys and manages homes across the country to increase its profit margins at scale, many techniques will be similar whether you’re covering Charlotte or Chula Vista, Raleigh or Richmond.
That’s why we built a toolkit for reporters, funded in part by the Pulitzer Center, for journalists with a variety of skill levels interested in probing the extent of corporate homeownership in their cities, regions and states.
The more we collectively understand how these corporate landlords are buying and operating in our communities, the better positioned we’ll be to ask important questions about their impact on homeownership – still the key path to wealth-building for American families.