As Cleveland retools housing codes to deal with LLC landlords, tenants face maintenance problems | News

On weekends and after school, Matrice Huff’s grandchildren visit her home in Cleveland’s Cudell neighborhood to ride their bikes.

Her son lives in a small apartment, so she holds onto the bicycles for the kids. In her basement is a small collection of old bikes in need of repair.

Not far away from the bikes is a puddle of water that, according to Huff, stretches across the floor when it rains. The more it pours, the bigger the puddle grows, reaching the dryer and the washing machine, she said.

It’s not her only complaint. The metal kitchen sink slips around in its opening in the countertop, and there’s a hole in the eaves of her roof outside.

Water has been leaking into Matrice Huff’s basement in Cleveland’s Cudell neighborhood. [Nick Castele / Ideastream Public Media]

Earlier this year, in February, a Cleveland building inspector visited Huff’s home. He took note of the leaky basement. He also cited the house for missing chimney bricks and a broken dryer vent, according to a ticket submitted in Cleveland Housing Court.

Beneath the handwritten note about the dryer vent, the inspector added these words to the ticket: “Imminent Danger.”

The ticket did not specify how the vent was broken. But when Ideastream Public Media visited earlier this month, the aluminum exhaust hose was detached from the back of the dryer. As the machine ran, it blew warm air into the basement. The hose, and the dryer itself, appeared to be covered with lint. Huff said she wasn’t aware of the problem.

“And it’s freaking sad that you pay rent, you know, even if you are on a program or whatever, but you still pay your rent, and they don’t have to hunt you down, and this is still the results you get,” Huff told Ideastream Public Media. “Nothing. That’s just not right.”

A ticket filed in Cleveland Housing Court for a broken dryer vent at Matrice Huff's home.

A ticket filed in Cleveland Housing Court for a broken dryer vent at Matrice Huff’s home.  [Cleveland Housing Court]

The exhaust tube has detached from the back of Matrice Huff’s dryer.  [Nick Castele / Ideastream Public Media]

Huff is a tenant who pays her rent with the help of Section 8 federal housing vouchers. Although she has spoken with maintenance workers in the past, she was uncertain as to who truly owned her home, she said.

When Huff moved in, Ohio State Properties LTD held the title to the house, Cuyahoga County property records show. Then in 2014, ownership transferred to LGLG LLC. In March 2021, LGLG sold more than 50 properties to Hammock Investments LLC, according to property records.

Hammock Investments LLC is part of a wave of property investors, including a contingent based out of state, who conduct their business through limited-liability companies. The LLC corporate structure protects company members from individual legal liability. It can also make true ownership difficult to trace. The practice is legal but has become a source of worry for Cleveland officials and other housing advocates.

On paper, Hammock Investments is based in Sheridan, Wyoming, at a corporate office that serves as a mailing address for other companies. But one contact for Hammock, and two other people connected to the company in public records, live in Southern California.

A Google Street View image showing the corporate office in Sheridan, Wyoming, that is listed in business records as Hammock Investments’ mailing address. [Google Street View]

Matrice Huff filed a civil case against Hammock in Cleveland Housing Court and has been paying her rent into escrow until the company makes repairs. It’s a legal option available to tenants with unaddressed maintenance problems.

In April this year, the city filed minor misdemeanor violations against Hammock for problems the building inspector noted at Huff’s house.

The court made attempts to reach Hammock. A docket entry in May said the case was postponed at the request of the defendant. After that, certified mail summoning Hammock to court went unclaimed this summer at a house on Woburn Avenue on Cleveland’s West Side, according to court records.

The Woburn address, and a tenant who lived there, used to be Hammock’s official in-state contacts in Ohio business records. But the tenant resigned as the registered agent this March, which led the Secretary of State’s Office to cancel Hammock’s Ohio business registration in May.

A certified letter notifying Hammock of Huff’s civil suit arrived on July 23 at the company’s address in Wyoming, where the mail was signed for in difficult-to-read handwriting, court records show.

U.S. Postal Service delivery receipt on Cleveland Housing Court summons

 A receipt from the U.S. Postal Service confirming delivery of a Cleveland Housing Court summons for Matrice Huff’s civil case at Hammock Investments’ address in Wyoming. 

But over the summer, Hammock did not make an appearance in the cases tied to Huff’s home.

Nor did it appear in court for a 2021 tall grass violation at a different house, according to the court docket. Summonses for that case were sent to Hammock’s Wyoming address, where certified letters were signed for in December 2021 and February 2022, court records show.

This August, a magistrate held Hammock in contempt for failing to appear in that case. Earlier this month, a magistrate levied a $35,000 civil judgement against Hammock Investments for its non-appearance in court, records show.

Aaron Berryman, whose name appears on Hammock’s business registration, told Ideastream Public Media in an interview Sept. 19 that he was unaware of the company’s housing court cases, although he knew that communications of some kind had gone to the Woburn address. He also said the company’s contact in Wyoming hadn’t sent him anything from the court.

A day after the interview, a certified letter about the violations at Huff’s house reached the company’s address in Wyoming, according to the court docket. Docket entries dated Sept. 21 said “fines and/or court costs” were “paid in full” in the housing violation cases at Huff’s house and at the house with a tall grass citation. The docket also showed that the civil judgment for failure to appear remained outstanding as of Sept. 30.

The company also re-filed with the Ohio Secretary of State, restoring its in-state business registration. That filing established a new mailing address in Canton.

Reached by phone this week after Hammock paid its court fines, Berryman said the company was now making efforts to correct the issues raised by the code violation case.

In an earlier interview, Berryman said he had had “a number of conversations” with Huff, although Huff denied this. Berryman said the company had gone into Huff’s house when it bought the portfolio of homes, that workers had responded to maintenance requests and that the company went to her door this summer, but no one answered.

If Huff didn’t recognize the name Hammock Investments, it’s because the company didn’t use it when communicating with tenants, he said. Berryman said the company used the “existing management structure” when it bought the houses.

Berryman said the company had maintenance workers on the ground in Cleveland. He said Hammock has run into difficulty reaching tenants, too, and that some don’t report problems because they are behind on their rent. Hammock also hired – and then parted ways with – a property management company whose work wasn’t up to par, he said.

“I want what’s best for Cleveland and the community as well,” Berryman said. “We certainly don’t want to exploit it. We want to be able to have our investment generate a good return, and we also want to do right by our stakeholders. And certainly the tenants are a part of that.”

Hammock Investments’ properties are scattered across Cleveland’s West Side and run the gamut of conditions. One home that appears to have been renovated recently is now under contract, according to a Zillow listing.  [Nick Castele /  Ideastream Public Media]

A team of local housing specialists published a paper this March that charted the expansion of investor-owned real estate in Cleveland. The paper warned of a “crisis of accountability” as more houses become the property of companies rather than homeowners.

Tim Kobie, the manager of strategic code enforcement initiatives for Cleveland’s Department of Building and Housing, conducted the research for the paper. He told Ideastream Public Media that he doesn’t see all investor owners as problematic for the city. But a subset of investors tend to ignore city building codes, he said.

“Getting a violation from the city for housing code is not necessarily a big deal, right? Like, you can probably look at any house in the city and nitpick here and there,” Kobie said. “But the problem is when people don’t respond to that. They don’t fix the issue.”

Cleveland has become enticing to real estate investors, thanks to the long legacy of the 2008 mortgage collapse, which drove down housing values for years, he said.

“During the foreclosure crisis, property values dropped, and they stayed relatively low for a long period of time,” he said. “However, rents for those properties didn’t drop with the price. So it’s a really attractive investment.”

But that attractive investment for out-of-town owners can also become more than they bargained for once things start to break.

It can be a challenge for city and court officials, as they struggle to keep tabs on code violations and to notify distant landlords.

And it can be a source of frustration for low-income tenants who say affordable, good-quality housing is hard to come by.

‘We didn’t know what we were inheriting’

Hammock Investments LLC was incorporated in Wyoming on Feb. 12, 2021, records show. The company also filed paperwork to do business in Ohio and California. Aaron Berryman’s name appears on both the Ohio and California business filings.

A Southern California native who graduated from business school at Case Western Reserve University, Berryman now works as a broker for real estate, mortgages, investments and financial services, according to a biography on the website of his investment firm.

Housing in California is expensive, making it a difficult market for investors to break into. A colleague suggested looking at Cleveland, Berryman told Ideastream. So in 2015, he turned his attention to Northeast Ohio, he said.

“Because of the home prices in California, it’s very difficult to get a positive return on your investment on rental properties out here. The return on investment, or what they call the capitalization rate, is just too low out here for it to justify,” he said. “In Ohio, obviously, prices are much cheaper, the cost of entry is cheaper and return on investment is much higher.”

The Hammock venture began several years later. In a single transaction in March 2021, Hammock Investments LLC bought 51 properties from LGLG LLC for $3.2 million, records show. At the same time, the company also took out an open-end mortgage of up to $8 million on the houses, according to a loan document included in county property records.

The lender was CoreVest, a subsidiary of the publicly traded California-based real estate investment firm Redwood Trust. In June 2022, the properties were released from the mortgage, according to a document filed with the Cuyahoga County fiscal office.

Map showing Hammock Investments' properties across Cleveland's West Side

Hammock Investments LLC bought 51 properties around Cleveland’s West Side from a single seller in 2021. [Ideastream Public Media / Google Maps]

Hammock’s houses are scattered across Cleveland’s West Side. They run the gamut of conditions. There are vacant houses. There are occupied houses. There are houses that appear in decent shape when viewed from the outside. There are houses behind on property taxes.

There is a house with a “for sale” sign posted outside. At another house Ideastream Public Media visited, workers in the midst of an interior renovation answered the door.

There are also are houses in distress – a not uncommon occurrence among Cleveland’s aging, weather-beaten housing stock.

According to Berryman, he didn’t learn until after the purchase that some properties were in poor condition. Because the houses were bringing in Section 8 rent, he assumed they must have been in good enough shape to pass inspections the prior year, he said.

“When we bought the properties, we only had access to a handful of them for inspection,” he said. “The balance of them, because of COVID, and because of the nature of the transaction, we did not inspect. We didn’t know what we were inheriting…We ended up, actually, inheriting some pretty bad properties.”

As for the late property taxes, Berryman said Hammock is doing its best to catch up and plans to pay what it owes soon.

Public records link two other people to Hammock Investments LLC: Mitesh Solanki and Hatel Bhakta. They are also based in the Los Angeles area, records show. Both signed for Hammock’s mortgage, identifying themselves as managers at the company, according to property records.

Solanki and Bhakta run a marketing firm called Creative Intellects and an investment company named Intellects Capital, according to a declaration filed in an unrelated civil lawsuit they brought in federal court in California.

Messages left at a phone number for Creative Intellects were not returned, nor was there a response to a message left at a number listed online for Bhakta. An attorney who represented the pair in the California lawsuit did not respond to an email seeking comment. Berryman declined to elaborate on their role in the company.

A Hammock Investments house with a mowed lawn in Cleveland’s Jefferson neighborhood. A company representative says Hammock expects tenants to care for their rentals as if they were the tenants’ own. [Nick Castele / Ideastream Public Media]

Berryman said Hammock Investments expects tenants to care for the properties as if they were the tenants’ own. He said that “in many cases,” they don’t do so – though he also said he was not passing judgement on those tenants.

“We have tenants that punch holes in walls – and we’ve got to repair those walls – or break doors,” he said. “And when Section 8 comes around and we discover that this happened, it’s now our responsibility to fix them. If we don’t fix them in a timely fashion, then we get docked for not fixing those issues.”

Berryman said Hammock has tried to reach its tenants, even as tenants told Ideastream Public Media they’d had difficulty getting a response from Hammock. He acknowledged that the geographic distance between California and Ohio can make communication harder.

“We’ve sent letters. We’ve posted notices on the door. Sometimes we still don’t get a response,” Berryman said. “The good news for us is that we do have some boots on the ground that we’re able to access, and we often do that. But yeah, it’s not as easy as it would be if we were there on the ground.”

Even though real estate is less expensive in Ohio than it is on the West Coast, there’s another variable in the cost-benefit equation that can hit investors: maintenance.

“Yeah, properties in Ohio are cheaper, but the cost of materials, the cost of maintenance, is about the same as it is in higher-priced markets,” Berryman said. “So that severely can impact your bottom line. And that’s what’s happened with us.”

A backed-up basement drain, a ceiling hole, a house for sale

This summer and early fall, Ideastream Public Media knocked on doors and left letters at Hammock’s properties across Cleveland’s West Side.

At many homes, there was no response. At some, tenants declined to speak. But tenants at six Hammock properties, including Matrice Huff, said they’ve put up with lingering maintenance problems. Of those, three showed Ideastream the issues firsthand.

One of the six tenants said water had been leaking into her basement, but declined to show a Ideastream inside because of her dogs.

Cuyahoga Metropolitan Housing Authority records corroborated her story, however. Those records showed that the house failed a Section 8 inspection in June because of the leaky basement walls, a “heavy mice infestation” and other maintenance ssues.

Berryman said CMHA has not always been communicative with Hammock, at times leaving the company in the dark about inspections.

“We’ve had a very difficult time touching base with CMHA,” he said.

A seventh tenant said Hammock had fixed a plumbing issue, but described the work as a “patch job.” On the other hand, a tenant who moved into a Hammock home in July said the landlords met with her and have responded to her requests for repairs.

Tito Cancel and Teresa Gonzalez’s basement in Cleveland’s Stockyards neighborhood has been flooding. [Nick Castele / Ideastream Public Media]

Tito Cancel, one of the tenants who spoke with Ideastream, has been doing battle with a flooded basement. He lives in Cleveland’s Stockyards neighborhood with his elderly mother, Teresa Gonzalez.

Outside, the concrete front step to the porch has buckled. It was covered up with a ramp made from a single wooden board painted lavender to match the trim around the door and windows.

Inside, earlier this month, two mattresses were strewn on the soggy, smelly basement floor. Cancel has been using them to soak up the water, he said. He also runs a motorized pump to keep the flooding at bay, he said.

The problem began in February when a drain backed up, Cancel said. Two months ago, the flooding knocked out the hot water heater, he said. Now he boils water to wash dishes and bathe, he said.

Cancel said the rent is $650 a month and that he and his mother can’t afford to move. That’s why he doesn’t want to report the problem to city building and housing inspectors, he said.

“We didn’t want to call the house inspector, because if they shut the house down, we have nowhere to go,” Cancel said. “My mom’s 81 years old, and I’m the only one that can take care of her.”

Berryman said workers snaked the drain a few months ago. Before that, the company used a high-powered hose known as a “hydro flush” in expensive efforts to clear the obstruction, he said. Ultimately, Hammock may need to coordinate with the city of Cleveland to have the sewer line repaired, he said.

Cancel said that workers did show up at the house this summer to inspect the basement, but that they left without doing work and did not return.

An upstairs leak at a Cleveland home caused a portion of the kitchen ceiling to collapse, according to tenant Alescia Hughey. [Nick Castele / Ideastream Public Media]

After living in a duplex, Alescia Hughey wanted to move to a single-family home, she said. She and her husband signed a rental agreement to live in a Hammock home in the West Boulevard neighborhood in May 2021.

The lease didn’t name Hammock Investments LLC. Instead, the lease was with NEO Construction and Management LLC, a related company based at the same Wyoming address as Hammock. Berryman signed for NEO Construction and Management as the property’s landlord and manager. The rent is $1,050 per month, according to the lease.

After she moved in last year, an upstairs leak caused a portion of her kitchen ceiling to collapse, Hughey said. A plumber’s invoice dated July 26, 2021, took note of the hole in the ceiling. When Ideastream Public Media visited this month, more than a year after the date on the invoice, the hole was still there.

Hughey said Berryman visited last year and saw the hole. Berryman denies this.

According to Hughey, three other people who worked with the company also saw the gash in the ceiling. One was a handyman named Richard, who lived in a Hammock house across the street and also worked for the previous owner.

Richard died in September 2021. Since Richard’s death, it’s been hard to get in touch with Hammock, Hughey said. She said she has even skipped paying her rent for several months – just to see if that will get the landlord’s attention.

“I’m feeling like I’m paying rent into a ghost account,” she said.

Dissatisfied with the quality of repairs she’s received, Hughey and her husband have paid out-of-pocket to hire their own plumber. The hot water tank is also now broken, Hughey said.

Berryman said Hughey had not requested reimbursement for the repairs she paid for, nor has he received maintenance requests from her lately. He said he had left messages for her in an effort to collect rent, but did not hear back.

“We did send Richard over there to address some issues and fix some issues, and to my knowledge they were fixed,” he said. “That’s the extent of the knowledge. I have not been in contact with Alescia in months.”

A set of wooden front steps on Cleveland’s West Side. Shirley Woodson said she has complained to the company that owns her house about maintenance problems. She said it would be expensive to move. [Nick Castele /  Ideastream Public Media]

Shirley Woodson moved into her house in the West Boulevard neighborhood about three years ago, she said. After Hammock Investments bought the property last year, she learned the news from her old landlord. Eventually she and Berryman connected by text message, she said.

Woodson said she sent a company secretary her complaints about the house. As recently as this August, the wood boards of her front steps were decayed. She said there were problems with her roof and ceiling, too, but declined to show Ideastream inside.

In late July this year, Berryman visited her, Woodson said. He had two people with him, whom he introduced as the landlords, she said. Woodson said she showed the trio around her house and pointed out what she wanted fixed.

“They told me once they fixed this property up, of course, the rent would go up,” she said. “And I told them paying rent is not a problem, it’s just your property is a piece of sh–, and I’m not paying rent for anything that’s like this.”

Berryman denies Woodson’s claim about a possible rent increase. Woodson, a nurse, said she followed through on her pledge and hasn’t been paying her rent. Previously, Hammock charged her $1,082 a month for her house, which has one bathroom and four bedrooms, she said.

“I’ve been looking to move, and it’s extremely hard, looking for a – even with me downsizing,” Woodson said. “I can downsize to a three-bedroom if I want to, and it’s still too expensive.”

Hammock offered to sell her a different property in the Clark-Fulton neighborhood at 3322 West 54th Street, Woodson said. The house was on the market for $99,500 and is now under contract, according to a Zillow listing. Photos show the interior has been renovated, with a fresh paint job and faux wood vinyl flooring.

The landlords wanted Woodson to try to get pre-approved for a loan, she said. She later texted Ideastream that she didn’t get the loan.

Earlier this month, a large tree branch crashed into Woodson’s back yard and the back of the West Boulevard rental house. Berryman said Hammock has received “very hefty” estimates for clearing the tree and is hoping insurance will cover the cost.

“We have nowhere really to go,” Woodson told Ideastream.

 Water drips from a broken downspout on a house owned by Hammock Investments in Cleveland’s Old Brooklyn neighborhood. [Nick Castele / Ideastream Public Media]

A city councilman takes notice

On Searsdale Avenue, just off busy Broadview Road in the Old Brooklyn neighborhood, a vacant Hammock house has become an eyesore for the next-door neighbor.

The gutter has partially fallen off the house, and one side of the porch has no gutter at all. The gutters have been broken since at least July 2021, Google Street View images show. On one rainy afternoon this August, water dripped out of a broken downspout and onto a driveway.

“It’s a disgrace, is what it is,” said Michael Klipfell, a retiree who sat on a bench on his porch next door.

A tenant who has rented his house for 20 years, Klipfell said the home next door used to be nice. Now, the front screen door swung open and closed in the wind. A neighbor has taken to mowing the front lawn.

Klipfell said he worries that the tree in the front yard could fall down. He called City Hall to complain about the house, but those complaints didn’t go anywhere, he said.

“They put you on hold, and they blow you off, and they say, ‘Well you got to call this guy, because this guy’s in charge of this one, and this is in charge of that.’ But like I said, and eventually you get mad, and eventually they hang up on you,” he said, laughing. “And like I said, I’m too old to worry about things.”

An inspector did come out to the house on Searsdale in June 2021 in response to a complaint, according to Tim Kobie with the city’s building and housing department. But no violation was issued, and the case did not move forward in court.

An apparently vacant Hammock house on Hood Avenue in Cleveland’s Old Brooklyn neighborhood.  [Nick Castele / Ideastream Public Media]

Four blocks south, a Hammock house on Hood Avenue stood vacant. Black trash bags peeked out from a partially open garage door. The wood of the front door was broken in places; this year, someone kicked it in, according to a neighbor. A man who lives next door has been cutting the lawn, the neighbor said.

The houses on Hood and Searsdale caught the attention of Kris Harsh, the city councilman who represents the area. Harsh, a freshman council member who previously worked as housing director for a neighborhood nonprofit, conducts his own door-to-door property surveys in Ward 13, he said.

Harsh said he sent a letter to Hammock in Wyoming, but no answer came.

“Hammock Investments isn’t a name that makes me think that they’re inspired to maintain property,” Harsh said. “It makes me think that they’re inspired to sit back and collect profit.”

Berryman said he remembered being contacted by a local official, but didn’t recall his name. He said he has also tried to speak with people in city government without success. Although Hammock’s purpose is to make money as a business, the company also intends to take care of its properties, he said.

“We’re doing our best to right some of those issues that were brought to our attention,” Berryman said this week. “Our intention isn’t to be slumlords.”

‘There has to be somebody locally that we can hold accountable’

Matrice Huff, the tenant who has been paying her rent into escrow, traveled to the Justice Center at the end of August for a court hearing in her case against Hammock. No one from the company showed up for the hearing, which could be attended virtually on Zoom.

At the hearing, a magistrate told Huff she had made a paperwork error, one that ended up delaying her case. Originally, Huff named her old landlord, LGLG LLC, in the forms she filed with housing court. In July, she had filed a new court motion asking a judge to order Hammock Investments LLC to fix up her property.

The magistrate scheduled a new hearing for October, giving Huff time to add Hammock’s name to both filings.

Last year, Justin Bibb ran for mayor on a promise to hold investor landlords to account. His administration and Cleveland City Council are working to update city laws to deal with far-off landlords and those who operate through LLCs.

Harsh, the city councilman, said he is helping the administration find a way to bring property managers and brokers “out into the light” of city housing code. That way, even if the owner is a continent away, the city has someone to hold responsible for dilapidated houses.

“We’re not sending somebody out to California to grab Joe Schmo and drag him into Cleveland housing court to deal with his violations. That’s just not in the budget,” he said. “So there has to be somebody locally that we can hold accountable for these properties. And that’s going to be the property management company.”

At the administration’s request, council amended city building codes this week to streamline the process of sending violation notices to landlords.

Huff is also making a change. She found a new house on the West Side and is waiting on a routine Section 8 inspection, she said.

The new house has a patio and back yard. Huff said she can’t move soon enough.

“I could have been in there tomorrow,” she said, laughing. “Today. Today would have been the perfect day to move.”

Copyright 2022 WKSU. To see more, visit WKSU.

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