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‘Predatory investing’ is obstructing efforts to improve housing in Cleveland

No matter how much Cleveland housing officials tried, Oval Investments LLC wouldn’t budge.

No matter how much Cleveland housing officials tried, Oval Investments LLC wouldn’t budge.

The company, founded by Hawaii resident Mamoru Kobayashi, owes more than $35,000 in housing code violations, on the single-family home it owned on East 173rd Street, with fees at one point racking up at a rate of $1,000 per day. And before the property was sold in 2021, the company owed $28,000 in delinquent taxes – more than the purchase value of the house.

Kobayashi, whom cleveland.com attempted to reach for this story, never received permits to improve the property. He didn’t bother to respond to certified mail from the city or show up in court for housing violations.

Even if Cleveland housing officials wanted to go after Kobayashi, they couldn’t. Oval Investments no longer exists, and since the property was owned by a limited liability company, Kobayashi is off the hook.

It’s a scenario all too familiar in Cleveland and one threatens to harm neighborhoods at a time when city officials are promising “housing for all” and planning to leverage a portion of the city’s $512 million in American Rescue Plan Act funding to deliver it.

Many real estate investors – often, but not always from outside Cleveland — have exploited the city’s relatively high rent and low housing prices to scoop up properties that are often left to rot.

“Predatory investors,” as some experts call them, buy cheap houses in economically distressed neighborhoods, but either refuse to make improvements or fail to receive permits for upgrades, despite cashing rent checks. Then, they sometimes sell the homes – often to other, similarly situated companies – for a quick profit.

“Predatory investing is done with the sole intent of financial extract, without care for the community, without care for people in that home and very often skirting every loophole possible to maximize financial returns, even if there are significant costs borne by taxpayers in the community and certainly people in the home,” said Jeff Verespej, chief of staff for Cleveland Neighborhood Progress.

Cleveland City Council President Blaine Griffin calls the practice “criminal.”

“I think this is the most egregious activity that’s happening in Cleveland, and quite frankly in my opinion, criminal, because what they’re doing is totally neglecting these properties once they get them and totally devastating our neighborhoods,” Griffin told cleveland.com.

Mayor Justin Bibb’s ambitious “housing for all” plan includes $68 million of one-time ARPA funding — $35 million in incentives for public/private housing, $10 million in home repair funds, $5 million for a revolving loan pool to benefit small and minority contractors and $18 million to address homelessness and provide affordable housing. Officials have publicly said the initiative will eventually encompass even more funding.



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