Brian Leibowitz eyes the newcomers on the courthouse steps with skepticism.

They come every Thursday to bid on foreclosed homes at public auctions, pulling up properties on their cellphones and raising their hands if they see a deal that looks good on paper.

Leibowitz, the director of acquisitions for a Baltimore real estate company, knows that making money here takes more than just adding up numbers. The seasoned homebuyer can navigate red tape, has enough cash to wait out permitting delays, knows which homes are in food deserts, monitors which neighborhoods have higher crime rates, and tracks whether blocks are about to stabilize — or come apart.

“Baltimore tends to chew people up and spit them out,” Leibowitz said of the newcomers.

In recent years, a wave of home investors has come to Baltimore. Rising interest rates have tempered interest lately, but they’re still buying. They buy at auctions, they buy from real estate listings, they buy from other investors, they buy through wholesalers. An analysis of property sales data by The Baltimore Sun shows that investors from across the world have bought property in Baltimore, particularly in low-income, predominantly Black neighborhoods that have high rates of vacant homes.

Other findings include:

—More than a third of all city home sales recorded in the first half of 2022 were investor purchases — double the rate just three years ago;

—In some predominantly Black neighborhoods, including Broadway East in East Baltimore, Carrollton Ridge in the Southwest and West Baltimore’s Harlem Park, three out of every five homes sold since 2019 have been bought by investors;

—In 2019, the median home sales price to an investor was $42,000. Earlier this year, that number hit $72,000.

Following the housing market collapse in 2008, investors pounced on foreclosed houses in many markets nationwide and began building a new type of investment: Massive portfolios of rental homes. It started with houses in California and the Sunbelt, but they’ve turned increasingly to metropolitan areas like Baltimore. Some corporate homebuyers rely on funds from pensions or private equity, but firms also solicit investments from individuals around the world.

In Baltimore, wholesalers tack posters on utility poles and tempt owners with cash for houses regardless of condition. Companies call residents repeatedly and target them with digital advertising. Investors who once focused on Philadelphia or Washington, D.C., are in Baltimore. Some see the city, pockmarked with at least 15,000 vacants, as the last good deal on the East Coast.

A recent study by Johns Hopkins University researchers found that investors own more than a quarter of city homes with vacant building notices.

Housing advocates say all this should be a wake-up call. Studies show large landlords are more likely to evict tenants. Advocates say the city needs to act aggressively or risk putting the fate of Baltimore’s most vulnerable neighborhoods in the hands of faraway owners. They also fear Black residents will miss out on a generational opportunity to build wealth — wealth that instead will be extracted by management companies and pocketed by anonymous investors.

Other people in the real estate industry say this is just a natural evolution. The city doesn’t have the money or means to fix up neighborhoods, they say, and individual homeowners can’t fix a block of vacants on their own. Without outside investors, vacant and dilapidated homes will continue to decay, pushing more residents to move out of the city.

Leibowitz works at Dominion Properties, a wing of the Dominion Group, an established Baltimore renovator and landlord that has pulled back on homebuying. Investors haven driven up the price of homes in Baltimore, he explained, meaning tighter profit margins and a greater temptation to cut corners on renovations.

“I don’t want to put out a product that is going to drag us down with some of the other, more poorly run operators in the city,” Leibowitz said. “We are willing to buy less homes to still hold the standard high enough to keep our reputation where it is … We know the numbers, and we know them better than most.”

For investors like Jason “Jay” Walsh, Baltimore still offers deals that are too good to pass up.

“If you wanted to give investors a drug, Baltimore’s the drug,” Walsh said. “The prices are right, the rents are right, the property taxes are right. The appraised values are right. Some people, they think it’s easy. It’s not easy. It’s not easy at all. But if you’re willing to put in the work, I think it’s a diamond in the rough, even with the rats.”

Walsh runs ABC Capital Investments, a Philadelphia firm that is one of Baltimore’s most active homebuyers. Walsh said he’s bought about 1,200 homes in the city since 2015, selling most to foreign investors and using third-party companies to manage them. Walsh said foreign investors are drawn to America’s housing market because they want a positive cash flow and somewhere to park their money in U.S. dollars — a more stable currency than, say, Colombian pesos.

After years of investing in Philadelphia, Walsh came to Baltimore in late 2015 and said he knew immediately that more investors would follow. They did, buoyed by several years of historically low interest rates.

“There’s a ton of people who are looking for good housing, because there’s a lot of decrepit, beat-up houses,” Walsh said of Baltimore. “I like a house where a tenant just left or it needs a little TLC or something like that. I don’t need to make it the Taj Mahal, but you can do a lot with $10,000, $15,000.”

ABC Capital is one of six real estate firms identified by The Sun that have bought at least 90 Baltimore homes since 2019, though it’s possible that’s an undercount because many buyers use multiple limited liability companies to purchase houses. One of Baltimore’s bigger landlords, for example, is the Atlanta-based private equity firm Sylvan Road; LLCs that share addresses with its corporate headquarters are buying homes here. Sylvan Road did not respond to a request for comment.

Philadelphia-based GNR Group has acquired 350 vacant Baltimore homes since 2019 and renovated about 140 of them. The firm plans to eventually manage 1,000 rental homes in Baltimore, focusing on tenants with Section 8 housing choice vouchers.

Property Invest USA is headquartered in Miami, operates offices in Mexico, the Dominican Republic and Turkey, and has websites in English, Spanish, Portuguese and Turkish. The company, which did not respond to questions from The Sun, has bought at least 123 homes in Baltimore since 2019. In promotional videos online, Property Invest USA claims Baltimore has the “highest yields in rental properties” and guarantees 10% returns on investments starting as low as $85,000.

Democratic City Councilwoman Odette Ramos, a housing advocate, wants investors to help rebuild neighborhoods. But she fears some are speculators simply gobbling up land and waiting for prices to rise.

“If they’re buying and holding, that is the biggest problem, because what we need folks to do is buy and do something with the properties, particularly the vacant properties,” Ramos said.

Ramos said one firm that appears to follow through and fix vacant homes is CR of Maryland. Of the six most prolific homebuyers identified by The Sun, CR of Maryland is the only local one. The Baltimore County firm has bought hundreds of homes in the city in recent years, primarily targeting vacants, renovating them and selling them as turnkey rentals to investors.

Homeownership is important, said Alexander Cruz, a partner at CR of Maryland, but the average Baltimorean doesn’t have the money or resources to fix up a vacant home. These structures are often old, falling apart and surrounded by other vacant properties, he said. That’s where companies like his come in.

“We really do care about the city and we want to be a part of the solution,” said Cruz, who is a part of Baltimore’s Small Developers Collective, a group of individual home renovators and developers. “Without investors, these properties are not going to be fixed. Again, I don’t think that homeowners are going to be able to do a $100,000-plus renovation and I don’t know that the city is, either.”

Cruz said his investors come “from all over,” but he stressed that CR of Maryland manages the properties it sells to investors — meaning tenants know who to call when there’s a leaky pipe.

“If we were selling to out-of-state investors that were going to try to manage from out of state, I think that would be an issue,” Cruz said. “Having local management is key.”

Baltimore needs more transparency about who is buying and managing rental homes, said Zafar Shah, an attorney at the Baltimore-based Public Justice Center. He sues landlords who let properties fall into disrepair and represents tenants in eviction court. Often, Shah said he’s up against LLCs with mysterious owners and elusive property managers.

“I can’t tell you how many times I’ve been at the bench … and someone for the plaintiff is speaking and my client just blurts out, ‘That’s not my landlord. I’ve never met that person before,’” Shah said. “There’s just this web of entities and very little disclosure.”

Sierra Goodman got caught in that web. In the fall of 2020, the mother of three moved into a recently renovated West Baltimore rowhouse across the street from a park.

“They basically put white paint over everything,” said Goodman, who soon found mold and water damage.

She discovered her home was still designated as vacant by the city and owner Selecta LLC didn’t have a rental license for the house, meaning it shouldn’t have been leased. After she complained for months about the living conditions, then threatened to call a housing inspector, Goodman said a company called FPBC LLC served her with an eviction suit.

FPBC is among the city’s most prolific homebuyers, having bought at least 90 homes since 2019. The company has no online presence and no phone number in public records. State business records say the firm is in Montgomery County and its registered agent is Fernando Plastino. He’s also the registered agent of Selecta LLC, which shares an address with FPBC.

When Goodman went to the courthouse for a hearing on her eviction, she found 10 other renters being sued by FPBC, including a pregnant woman whose roof was leaking. No one from FPBC showed up at court, Goodman said, and court records show her case was dismissed.

Plastino did not respond to multiple requests for comment.

Goodman said her initial point of contact for the rental home was Josh Savage, a real estate agent considered to be one of the city’s top wholesalers. He didn’t directly comment on Goodman’s case.

Wholesalers play a key role in helping investors like FPBC buy homes in Baltimore through off-market deals. They find homeowners, offer them cash for their houses, then find investors who buy the homes at higher prices.

It’s an unregulated industry that anyone can try. Some officials, like Ramos, want wholesalers to be licensed, like real estate agents. That would require a change in state law.

Savage said he learned about real estate years ago by watching YouTube videos on wholesaling and has helped people all over the world buy into the city.

“Anyone who brings an investor to Baltimore is doing the city a service, and I say that because I’ve never met an investor who wants to lose money,” Savage said. “They’re really investing here because they believe Baltimore is going to make a positive turn and the property value will appreciate significantly.”

That’s the problem, said Nneka N’namdi, the founder of Fight Blight BMore and an advocate for community-led development. It should be legacy renters and homeowners of these neighborhoods who benefit from an increase in property values, N’namdi said.

She called this wave of outside investment in Black neighborhoods a final stage of an “ethnic cleansing.” Baltimore’s once-vibrant Black neighborhoods are battered from decades of racism in multiple areas, including mortgage lending, failed infrastructure projects and overpolicing and overincarceration, as well as disinvestment from white flight. Now, when the neighborhoods are at their cheapest, investors and wholesalers are pushing out Black homeowners, N’namdi said, and eventually, gentrification will push out Black renters, too.

“They are superpredators,” N’namdi said.

Jack BeVier, a partner at Dominion Group, agreed investors are targeting some of Baltimore’s most vulnerable neighborhoods, but he had a different takeaway than N’namdi.

This is not a story of investors preying upon Baltimore, he said; it’s a story of Baltimoreans disillusioned with their city. Yes, there’s a wave of investor interest, Bevier said, but only because there is a vacuum of interest from individual Baltimoreans.

For decades, it’s been more expensive to rent a home in Baltimore than to pay a monthly mortgage, BeVier said, but people would rather put down roots where they believe neighborhoods are safer and schools are better.

“That is an indictment of the crime rate and poor management at City Hall that Baltimore’s own citizens — despite massive affordability — are more interested in renting for 12 months than buying for 30 years,” BeVier said. “It doesn’t mean that the evil investors are coming in.”

While BeVier and N’Namdi have different views on why investors focus on low-income and predominantly Black neighborhoods, they agree on a few things: The residents of these neighborhoods have been failed by their government, they deserve a better quality of life, and that change won’t happen without intervention.

About the data

The Baltimore Sun reviewed residential sales between parties at arm’s length for improved properties, meaning sales of detached houses, rowhouses and condos, that were bought and sold by parties with no shared financial interest. The Sun requested the data this summer from the State Department of Assessments and Taxation, which provided recorded sales from 2019 to through early July. The data originates from property recordation performed by staff of the Baltimore City Property Transfer Office, which said it is working through an 11-week backlog. That means several months’ worth of data is not included in the analysis.

The Sun identified investors by searching the data for terms such as “LLC” and “corporation.” Sorting this data showed that home sales to investors in Baltimore has increased compared to home sales to individuals. Overlaying that data on a map of Baltimore’s neighborhoods showed investors were especially active in low-income and predominantly Black neighborhoods. Homes purchased via an LLC transfer — when an investor buys an LLC that owns a portfolio of homes — would not be recorded and don’t appear in this analysis.