From Inver Grove Heights, Minnesota, to Fridley to Brooklyn Center, city leaders have all started to notice a change in their neighborhoods: investment firms swooping in to buy single-family homes.
In Maple Grove, one firm snapped up nearly 30 houses, concerning city leaders as they watched the more affordable starter homes get taken off the market and converted into rental properties.
The push by private equity firms into single-family real estate has spread across the Twin Cities suburbs in recent years, an echo of what happened in Minneapolis and St. Paul in the early 2010s. And the rise of investor ownership continues to spark fierce debate — from city halls to Congress — about the effects on the homeownership rate and the limited stock of affordable housing.
“The rent they are charging for these homes is often more than one would pay for a mortgage,” said Joe Hogeboom, Maple Grove’s community development director. “And our concern is that opportunities for young families to build generational wealth are becoming less and less.”
Worried about the trend, some suburbs have tried to limit investor-owned housing and concentration of rental properties, and are urging action at the state and federal levels.
Critics of the rise in investor ownership worry about first-time homebuyers being outbid by companies, home prices going up and out-of-state absentee landlords. But others emphasize that only a fraction of the single-family housing stock is owned by investors.
They argue that firms sometimes purchase properties in need of repairs that first-time homebuyers couldn’t finance or wouldn’t want to take on. And they say more people want to rent single-family homes these days.
In the Twin Cities in 2024, the most recent year of data, the investor with the most homes, at more than 1,300, was Tricon, a division of investment firm Blackstone.
In a statement, a Tricon spokesperson said the company manages fewer than 0.1% of single-family homes in Minnesota.
“Over each of the past several years, we have been a net seller of homes in Minnesota.”
The company said its rents cost less than owning a home and renting unlocks “opportunities for Americans to access great homes, in great communities.”
Most single-family rental homes are still owned by so-called “mom and pop” landlords who rent a single property they own but don’t live in. But the number of large investors in the space has grown, data from the Federal Reserve Bank of Minneapolis show.
The share of Twin Cities single-family homes owned by investors — defined as owners with two or more properties they don’t live in — more than doubled between 2006 and 2024, from 1.5% to 3.5%.
That’s a jump from about 9,800 homes to 26,000.
Investors entered the single-family home market in a big way after the Great Recession, buying up homes in neighborhoods in north Minneapolis and Frogtown in St. Paul, many of them foreclosures.
The number of investor-owned homes rose, then stabilized as the housing market regained its footing. The low interest rates during the pandemic brought investors back into the single-family housing marketing, this time, showing more interest in the suburbs.
Cities like Brooklyn Center, Oak Park Heights and Inver Grove Heights have a higher share of investor-owned rentals than the metro as a whole. In response, some cities have tried to curb or set some rules around investor-owned rentals.
Maple Grove a couple of years ago adopted new rules, including requiring rental property owners to have a local manager. Other Twin Cities suburbs, including Columbia Heights and St. Anthony, have capped how many rental properties are allowed in a certain area.
St. Anthony also limited how many homes someone can own and rent out. City leaders also point to the increase in investor-owned housing as they consider regulating Airbnbs and short-term rentals.
Blaine officials cited the rise in corporate rental housing when they prohibited the backyard tiny homes called accessory dwelling units. One reason investors may be attracted to the suburbs is standardization, said Laurie Goodman, founder of the Urban Institute’s Housing Finance Policy Center.
Homes built after 1990 are more likely to have doors, windows and other features that are common sizes, making them more economical to fix.
Pat Paulson, chair of the governmental affairs committee with Minnesota Realtors, said investors also are responding to higher demand for single-family rentals, a concept that soared in popularity during the pandemic.
“There are a lot of households where people want to live in a house and in a neighborhood where there are houses, but they don’t want to buy or aren’t qualified to buy,” he said.
Rents are rising across the board. But they recently began soaring faster for single-family homes than apartments in many parts of the U.S., including in the Twin Cities, according to research from the Urban Institute.
The average single-family home in the Twin Cities rented for $2,244 per month in 2024, about 40% more that it did in 2017. The average monthly rent for an apartment rose just 20% over that same time period, to $1,520.
Minnesota Sen. Liz Boldon has been working in recent years on tightening regulations for investor-owned housing, which she views as one of many factors making homeownership less attainable. But a bill that would have restricted private equity companies to owning just 100 properties did not pass this session.
The measure would have affected at least five large investors who, according to the Minneapolis Fed, own more than 100 homes in the Twin Cities area.
“These firms are coming in, scooping up sometimes whole swaths of homes in a community, and they’re really driven by profits,” Boldon, DFL-Rochester, said. “And that’s what we’re seeing in the suburbs right now, they’re going to go where the profits are.”
Proposed federal legislation that’s gained bipartisan support would ban corporate landlords from buying more than 350 homes. Home Line, a Minnesota tenant advocacy organization, supports such restrictions, based on experience working with these companies’ tenants.
“They’re just these Wall Street sort of investment landlords who are removed from the day-to-to-day,” said Eric Hauge, co-executive director of the organization.
That can mean higher eviction rates and blanket policies in leases — sometimes ones that aren’t even enforceable under state law, he said.
Hauge cited research from the University of Minnesota’s Center for Urban and Regional Affairs that found evictions rise with the size of a company’s rental portfolio. But Paulson, with Minnesota Realtors, argued against such blanket restrictions on corporate ownership without considering changing market conditions.
He said home sellers often need to move fast, and limiting investors’ purchasing power can make it harder to sell when buyer demand is low. Paulson pushed for a more incentive-based approach to encourage investors to sell their single-family homes.
In Maple Grove, city officials said in the past couple of years they’ve seen a drop in private equity firms buying homes, since the suburb required landlords to have a local presence.
But Hogeboom said he’d still like to see changes.
“We want to make sure there’s incentive on the state and federal level to encourage homeownership and first-time homebuyers,” he said.