5 Companies Own 8,000 Kansas City Area Homes, Creating Intense Competition for Residents Kansas City homebuyers are bidding against mega-corporations for houses. This is how out real estate investment impacts local communities.

Brenna Dwyer was in a race to buy her first home. When she and her sister decided to purchase a house together in 2020, they didn’t realize how steep the competition would be — or who they were up against.

“If we would find a house we liked and needed to think about it, by the time we had just a few days to talk it was already gone,” she said. “We had to make a decision quick or the house would go away.”

It took the sisters six months to find their home in Shawnee, Kansas. Then it took them one day to put down an offer. 

The Dwyers ran into an increasingly rushed homebuying market where Kansas Citians find themselves bidding against large investors swooping in to find rental properties. 

That, in turn, continually shrinks the number of houses available for people buying for themselves and further hurries financial decisions that could drive a family’s economic security for decades. 

Investors are “intentionally targeting what has primarily been housing intended for ownership to turn it into rentals,” said Josh Akers, research manager for the Mid-America Regional Council. 

A strong presence of large and out-of-state investors can have repercussions for tenants too, researchers found. 

Real estate agents and large property investors say that the tight market comes from a housing supply shortage. Rising interest rates make it even harder for homebuyers to afford what they want — and the cost of borrowing money typically deters small investors from scooping up homes for rental income.

Still, a 2023 MARC study on investor impact found that rentals make up almost a fourth of all the single-family homes in the nine counties covering and surrounding Kansas City. Of the region’s 157,000 single-family rentals, nearly 20% are owned by people or companies with 10 or more properties. 

Where Did Large Investors Come From?

Thirty-three companies own nearly 14,000 homes in the Kansas City region, MARC found. Five of those companies own nearly 8,000 homes.

Nearly 45% of the single-family rentals in Jackson County are owned by investors with 100 or more properties, according to the study.  

VineBrook Homes is one of the top five investor-owners in the region. Its latest SEC report shows that the Ohio-based real estate company owned 24,657 homes in 18 states as of December 2022. 

VineBrook owns 1,118 properties in the Kansas City area, spokesperson Megan Grabos wrote in an email to The Beacon. 

Investment companies started buying up more homes in the wake of a wave of foreclosures set off by the 2008 housing crisis, Akers said. 

Years of banks making subprime loans to homebuyers caused the housing bubble to burst. Millions of properties tumbled in value and real estate investors were left with an opportunity to buy a large amount of property quickly and at cut-rate prices. 

Akers said the pandemic compounded the trend. Many mom-and-pop landlords with 10 or fewer properties found themselves stretched thin on their payments due to eviction moratoriums that allowed tenants to stay in their homes and apartments even if they couldn’t make the rent. Large-scale investors were able to swoop in and pick up any property the smaller landlords lost. 

But what was once a reaction to an abundance of abandoned or repossessed properties sitting on the market has now become a standard business practice for large investors looking to maximize their profits, Akers said. 

“They’re competing directly in the community, directly in the real estate market where most individuals or families are trying to buy properties, as opposed to looking at foreclosures,” he said. 

C.J. Pennington, a real estate agent with the Ken Hoover Real Estate Group, said that every listing is likely to get an offer from a large institutional investor, but they aren’t as prevalent in the market as they were just a few years back. 

He believes higher interest rates on homes have steered many investors away.

“It wouldn’t be as lucrative to have a lot of their money tied up as it was when they were buying everything,” Pennington said.

But Akers said that higher interest rates only impact small investors who may rely on loans to purchase property. 

“Mega investors are operating in cash with large pools of liquid capital,” he said. “So interest rates don’t have an impact on their operations.” 

Steeper mortgage rates make many current homeowners reluctant to sell their homes and take on higher mortgages on the new houses they’d move into. That’s propelled a shortage of housing. 

What is the Impact of Corporate Investing in Real Estate?

Dwyer bought her house during the pandemic with a $50,000 down payment. The house was listed for $232,000. 

“We walked in and immediately knew it was the nicest house we’ve seen,” she said. “We weren’t going to find anything like it for this price so our Realtor got on it that day.” 

The median listing price for a house in Kansas City in December 2020 was $324,475, according to Federal Reserve Economic Data. By December 2023, it was nearly $400,000. 

MARC has found that homeownership in the Kansas City region has declined by 2.9% since 2011. 

Akers said a large presence of institutional buyers can push up home prices. He said that’s especially true for less expensive starter homes. They’re targeted by institutional buyers because of price, uniformity and ease of renovation. 

Those well-heeled investors can also increase demand as they outcompete prospective buyers on these homes. 

Jaz Hays and his wife bought their two-bedroom home in the Northland in 2020. 

Like Dwyer, he said they looked for about four months and toured at least 10 houses, but everything they were interested in sold too quickly.  

“My wife and I had to put it in an offer within seven hours of our house being listed,” he said.

For a seller, a choice between an individual who would pay through a mortgage or a corporation that can pay the price upfront is easy.

“A lot of the competitive advantage that those institutional buyers have is that they are cash buyers,” Hays said. “It made it really difficult for us to purchase our first home.”

Pennington said large institutional buyers aren’t overheating the market. Rather, he said it’s a shortage of homes.

“It’s simple supply and demand,” he said. 

A combination of fewer houses for sale than people looking to buy, as well as a drop in home construction, has tightened the market and pushed up prices. 

Where are These Investors?

Large property owners also tend to consolidate ownership in certain neighborhoods. MARC’s study found that much of their holdings were concentrated in the region’s suburbs and on the northern and southern edges of Kansas City. 

Owner clustering in one area can make it easier for companies to push up rent prices for tenants, while small-scale landlords are more subject to market rates, Akers said. 

“They can raise rents in particular areas and achieve those rents, regardless of the market that’s around them.” Akers said. “People that are looking to rent in that place will need to pay whatever the going rate is for rent.”

VineBrook says its houses are typically three-bedrooms that go for $1,234 a month. That’s cheaper than the average rent of $1,540 for a two-bedroom apartment in Kansas City, per Rent.com.

Gabos said the company is one of the largest providers of affordable housing for rent. 

“We were founded on a vision to acquire and restore distressed properties,” she said in the email.

The company, which has received complaints of neglect and unfounded evictions, tends to own property in predominantly Black areas, a Midwest Newsroom investigation found. 

Nearly 13% of single-family rentals in the Kansas City area are owned by businesses based outside of Missouri or Kansas, according to MARC. 

And when you add apartment buildings into the mix, those numbers go up. 

A 2021 study on Who Owns KC by Jordan Ayala, a research professor at Bard College, found that owners of residential properties in Kansas City, both single and multifamily, come from more than 2,000 cities around the world.

“These are often called absentee landlords,” said Hays, who compiled and processed the data for this study. “They won’t necessarily be super responsive to their tenants, often because they’re faceless. So their tenants don’t even know who they are.”

This article first appeared on The Beacon and is republished here under a Creative Commons license. Mili Mansaray is the housing and labor reporter with The Beacon, a member of the KC Media Collective.