At 72, Rita Knight-Gray has no intention of leaving her longtime home in Glenville, on Cleveland’s East Side. Last year, investors accounted for 29.1% of home sales in that part of the city, according to data compiled by the Redfin real estate brokerage.
Knight-Gray inherited her home in 1987 and bought the house next door, which she maintains as a rental, the following year. The Cuyahoga County Fiscal Office puts the combined market value of the properties at just over $79,000. One day in late February, she received a text message from someone with a Florida area code and a postcard from a Columbus-based company that promises to close deals in as little as a week.
“Every now and then, I answer a call, and I ask them what makes them think I wanted to sell,” she said. “Sometimes, I just get really pissed, and I say, ‘If you’re willing to give me $3.5 million, we can talk.'”
It probably takes 100 calls to get even three people to answer the phone, said Andrew Dunn, a co-founder of Capital Growth Group, a Cleveland-based company that offers cash for houses. Since launching their business as a side-hustle two years ago, Dunn and business partner Tyler Powell have acquired more than 60 houses by partnering with behind-the-scenes investors.
The 28-year-olds are focused on fix-and-flips, properties that they renovate and hold for fewer than 90 days. Those homes often are priced at $30,000 to $100,000 and require at least $10,000 worth of work. Some become rentals. Others sell to owner-occupants.
Powell and Dunn said that half of their sellers are individuals. The rest are landlords. Many of the owners lack the cash to make repairs, are facing foreclosure or have fallen behind on their property-tax bills.
In late 2020, Ann Richardson and her siblings sold a three-bedroom colonial in Maple Heights in a deal with Capital Growth Group. Richardson’s 91-year-old mother had died earlier that year, leaving behind a longtime home in need of extensive upgrades.
“Honestly, we just didn’t have the energy to do what we needed to do with the house to get it to a place where it could be put up for sale,” Richardson said.
The family talked to a representative from We Buy Ugly Houses, a nationwide network of franchises that offer all-cash deals and quick closing timelines. But Richardson and her sisters felt more comfortable with Dunn’s approach.
They sold the house for $23,000. One month later, it changed hands again, for $59,000, according to public records. Since then, the property has flitted on and off the market, where it has been advertised as a rental generating income of $1,000 a month.
In Maple Heights, the share of investor purchases hit 36.2% last year, Redfin found.