One millionaire landlord was behind half of Milwaukee’s evictions during Covid lockdowns last June. Here’s the story of how corporate landlords helped drive the evictions crisis

• Corporate landlords in cities like Milwaukee helped drive an evictions crisis during the pandemic.
• Landlords have filed 272,612 evictions in 27 cities since last March. The national count is likely far higher.
• Corporate landlords, which own almost 50% of rental properties, are more likely to evict, advocates say.
• See more stories on Insider's business page.

During one week in June, as nationwide coronavirus deaths climbed steadily above 100,000, companies tied to Youssef "Joe" Berrada filed 225 evictions in Milwaukee. That made him responsible for over half of the city's evictions.

Berrada has long been synonymous with evictions in Milwaukee. In 2017, the millionaire mogul was responsible for more than one in 10 of the city's evictions, which the Milwaukee Journal Sentinel reported alongside descriptions of his multiple palatial homes, luxury cars, 49-foot yacht, and the time he served his own ex-wife with eviction papers. One of his tenants, Ernestine Young, told the paper that after a Berrada company purchased her building, workers cleared out her storage area without telling her. She not only lost her family photographs but the urn that held her infant granddaughter's ashes.

But threatening thousands of residents with homelessness in the middle of a pandemic struck many in Milwaukee as a new level of villainy.

"It was obscene," said Colleen Foley, the Executive Director of the Legal Aid Society of Milwaukee, a public interest law firm that provides free legal services, including to poor tenants facing an eviction. "That many evictions in one week? It was breathtaking and appalling and like, holy cow, things are out of control."

Foley's organization had tangled with Berrada before, but now Foley decided on a new tactic: she penned a scathing op-ed in the Sentinel, calling out Berrada, whose companies manage about 8,000 rental units in the greater Milwaukee area, directly.

Two days later, an email landed in her inbox: Berrada wanted to meet.

On July 22, Foley and two of her colleagues sat around a conference table at Berrada Properties headquarters in Milwaukee, masked and spaced 6-feet apart, with Berrada and his lawyer. It was the start of an unlikely alliance to solve Milwaukee's eviction crisis.

Foley explained that the eviction filings Berrada was handing out like candy would haunt tenants for years to come, making it close to impossible to find future housing. When she told Berrada that renters of color and the very poor were disproportionately impacted, she said that Berrada, who is Moroccan and came to Wisconsin as a foreign exchange high school student in the 1980s, seemed to recoil.

"We had some really thoughtful discussion that I think surprised everyone who expected the other side to be the devil," said Foley. "The interesting thing about the pandemic is that people who had drawn lines in the sand and had nothing to say to each other are suddenly willing to rethink things."

The group met three more times over the next weeks. Pressure meanwhile mounted from other directions. The Milwaukee Autonomous Tenants Union organized a protest outside of Berrada Properties demanding a halt to evictions. Bad press from the Sentinel, which has included drone footage of Berrada's 18-room mansion, was not letting up.

Finally, at the end of the summer, Berrada agreed to an eviction "hiatus." Immediately after, the city's eviction rate dropped by a breathtaking 36%.

Berrada declined to speak to Insider for this story but, through his lawyer, he said Berrada Property Management's hiatus doesn't necessarily reflect a change of heart.

"BPM has always recognized the potentially adverse impact a filed eviction may have on a tenant's ability to find suitable housing," they said over email. "Eviction is not, and has never been, BPM's first response to a tenant who is not paying rent. Truly, an eviction benefits neither the landlord nor the tenant, and BPM always attempts to find a solution to the situation before filing an eviction."

ONE BONANZA, AND NOW ANOTHER

Berrada was hardly alone in showing tenants the door during a pandemic. Landlords have filed 272,612 evictions since March-and that's just in the 27 cities that the Eviction Lab at Princeton University tracks.

Housing advocates fear that the worst is yet to come. Next week, the Center for Disease Control's eviction moratorium, which has stemmed evictions but not stopped them, is set to expire again. Even if it is extended, housing experts say that it will only be kicking an eviction tsunami down the line- not to mention ignoring the fundamental problems with housing in America. By January, almost 12 million renters owed an average of $5,850 in back rent and utilities-an insurmountable sum in a country where before the pandemic 40% of the population didn't have $400 on hand in an emergency.

"It's just a wild historical aberration We've never seen anything like it before," says Peter Hepburn, an Association Professional Specialist at the Eviction Lab. "Catching up on that much back rent is going to be borderline impossible without emergency rental assistance."

The eviction crisis has been reported as a "both sides" proposition: when tenants can't pay rent, landlords can't pay their mortgages, putting both parties in a tough bind during a national cataclysm with no winners. But growing evidence shows that more and more evictions aren't driven by so-called "mom and pop" landlords struggling to balance their personal checkboards.

What happened in Milwaukee last summer exposes an overlooked, but driving force of the evictions crisis: corporate landlords are becoming an increasingly dominant player in the U.S. rental market, and they are more likely to throw their tenants out onto the street.

Before the 2008 recession, corporate landlords owned 20% of rental properties; today, it's nearing a whopping 50%. The shift stems from a choice the U.S. government faced in the aftermath of the housing crisis when it absorbed hundreds of thousands of foreclosed homes: put those properties back in the market slowly, with a focus on getting people back into their homes, or turn to private equity firms, who were the only players at the time with massive cash on hand. Between 2011 and 2013, private equity firms, buoyed by huge subsidies, snapped up about 350,000 homes from banks.

Since the Center for Disease Control's evictions moratorium took effect last September, evictions by corporate landlords have actually been steadily increasing. Research by the Private Equity Stakeholders Project (PESP), a research and advocacy organization, has tracked nearly 50,000 evictions by corporate landlords in select counties in six states since the beginning of September, and found that corporate landlords are responsible for the majority, and sometimes overwhelming majority, of evictions in some counties. In January and February alone, corporate landlords filed to evict more than 16,000 people- including over 850 eviction filings in Texas counties since they were hit by Winter Storm Shirley.

In Georgia's DeKalb County, where Atlanta is located, corporate landlords were responsible for 82% of the 764 evictions during a single week last December; 68% of the 1,341 evictions in Arizona's Maricopa County, where Phoenix is located; and 68% of the 964 evictions in Texas's Harris County, where Houston is located. Phoenix and Houston are the cities with the second and third highest numbers of evictions during the pandemic, according to Princeton's Eviction Lab.

For many corporate landlords, there is no system for understanding why a tenant might have missed a rent check- it's simply data plugged into a computer system that spits an eviction notice out after a set period of time.

The problem is almost certainly far bigger than we know. There is no national database of evictions, and evictions are only tracked at the level of the country's more than 3,000 counties. Since corporate landlords are often an umbrella for multiple limited liability companies and shell companies (often to take advantage of tax benefits), their names rarely appear directly on eviction filings. In Berrada's case, for example, it took dogged local journalism to track the 75 different firms linked to him and then painstaking work to cross-reference them with local eviction filings.

There's also the possibility of informal evictions, such as when tenants leave because of unattended repairs or unsafe conditions. In Milwaukee, informal evictions are twice as likely as a formal one.

Since the start of the pandemic, many of these companies have also been the recipients of substantial federal aid. According to a recent report by Jobs With Justice and PESP, 198 corporate landlords got almost $320 million in federal COVID subsidies and then went on to file at least 5,381 evictions between March 16 and October 13th. These COVID stimulus subsidies could have covered the nine months of rent due since the beginning of the pandemic for 24,394 families, Jobs with Justice calculated. Ventron Management, for example, received $3.5 million in government funds and has filed 1,017 evictions.

Housing experts warn the current crisis could trigger the kind of corporate consolidation of the housing market we saw in 2008-only this time at warp speed, as corporate entities lap up properties previously owned by "mom and pop" landlords driven out of business by the pandemic.

"They're sitting on huge amounts of cash like vultures, waiting for the bottom to fall out so they can scoop up even more," said Scott Klinger, a Senior Equitable Development Specialist at Jobs with Justice.

In April, the Wall Street Journal called it a "Potential Bonanza in Distressed Sales."

When the CEO of Blackstone Stephen A. Schwarzman was asked at the Goldman Sachs Conference at the beginning of December if the pandemic would be similar to the last financial crisis for investors, he gloated: "Blackstone was a huge winner coming out of the global financial crisis and I think something similar is going to happen now. About half of the firm's earnings are from a real estate business, just to give you some idea how this breaks: We picked the good neighborhoods, if you will."

"WHERE WILL WE GO?"

Back in June, Alexis Pollard was 38 weeks pregnant and trying to get her 6-year old son through virtual school while also caring for her 5-year old son and two-year old twin girls. The 26-year old had lost her job at Macy's during the company's wave of layoffs when the pandemic started. As the sole provider for her kids, she quickly fell behind on rent.

Then, she received an eviction notice from her landlord, Joe Berrada.

"There was a lot of things going through my head: where will we go? What if my kids are taken from me? I was pregnant and about to have a baby; I wouldn't be able to go anywhere with a newborn," said Pollard.

When she opened Facebook, she saw people posting about Berrada's rampant evictions. When she turned on the television, she saw coverage of the same.

"I was very surprised. I'm like, oh my god, there are so many people. He's evicting everybody, where will we go, who will we rent from? He's already bought up everything in Milwaukee," she said.

She packed their belongings and rented a storage space, knowing that when the sheriffs came to kick them out they'd toss all their belongings onto the sidewalk. She scrounged together enough money for a couple nights at a hotel but had no idea where they'd go after that.

Eight million Americans have entered poverty during the pandemic. In the first week of November, almost 12% of adults in the U.S. - 26 million people - said there was not enough food for their household sometimes or often in the last 7 days.

In a normal year, four people are evicted every minute. When 14 million Americans lost their jobs at the beginning of the pandemic, housing experts predicted an "eviction apocalypse." In some states, like Wisconsin, the worst case scenario was kept at bay by a statewide moratorium. These moratoriums, however, were temporary. Wisconsin's only lasted for the first 60 days of the pandemic and when it expired, courts faced an onslaught of evictions.

"We were inundated," said Foley, "It was like we've never seen before."

An eviction filing functions as a stain on a tenant's record which can make it close to impossible to find future housing. While not all evictions result in a forcible removal, filings can trigger job loss, increased poverty, and serious mental health issues that include depression and suicidal ideation.

Evictions are also a stark reflection of the country's racial divide. Black women face eviction at twice the rate of white renters in 17 states, according to analysis by the American Civil Liberties Union.

"Black renters are just wildly, disproportionately affected by eviction," said Hepburn, of the Eviction Lab. "That's true historically and it remains true during the pandemic."

Jacqueline Clark was evicted by a Berrada company before the pandemic, in 2017, and now she organizes with the Milwaukee Autonomous Tenants Union for better renter protections.

"You're dealing with a community that is poor and has low wages. It's like you just don't care about people," she said. "Everyone just wants a roof over their head, somewhere they can come inside and deal with life."

Clark's eviction came when she was in between jobs. She said the late payments were so steep that she soon owed the equivalent of two months of rent. It took her an entire year of applying to new apartment buildings before she found someone willing to rent to her.

"It was the most devastating experience; I had never been evicted, I had never been in such a situation," said Clark. "I couldn't talk to nobody, there's no one to connect with. It's just a cut and dry type of operation that he runs."

In the Covid era, housing courts across the country went virtual. Tenants are expected to attend via video conference, often an impossibility for those without smartphones or laptops. Tenants with government-issued phones with limited minutes can blow their entire month's allotment just waiting on hold for their case to be heard. Housing experts say that many cases have been decided in the landlord's favor when a tenant doesn't "show up" due to a technical glitch with video conferencing software.

"MUSICAL MANAGEMENT COMPANIES"

It wasn't always so hard to keep the roof over your head in America-in part because corporations didn't used to own so many people's homes. Over the last decade, over twenty cities have seen rent costs increase by over 50 percent in the same time period. These increases are partially driven by corporate landlords, who are more likely to increase rent- often by renovating a property after an eviction and jacking up the price.

At the same time, wages have stagnated dramatically. When adjusted for inflation, a 2018 hourly wage has about the same purchasing power as it did in 1978. In fact, the average 1973 hourly minimum wage (just over $4) would be equal to about a $24 average minimum wage today. Instead, today's federal minimum wage is just $7.25.

Meanwhile, housing the poor is a prosperous business, given that poor and relatively wealthy renters pay similar amounts of rent. While landlords renting to lower-income renters face greater risk of missed rent payment or sudden vacancies, they offload that risk onto tenants which means that landlords who rent to poor tenants make nearly twice as much profit as those renting to people of means.

Complicating things further for tenants is that private equity firms are regularly buying and selling properties among themselves. In some parts of Atlanta, for example, where corporations own at least one in five single-family rentals, tenants might not know who their landlord is until they receive an eviction notice

Erin Willoughby, an attorney at Legal Aid Atlanta calls the phenomenon playing "musical management companies." On multiple occasions, she has arrived at housing court, ready to defend a tenant, only to learn that the unit was sold the previous day or week.

The fact that the industry is so difficult to track is also a huge part of why there is so little accountability for corporations who are evicting people in the middle of a pandemic, despite the CDC moratorium.

"It's in such a striking contrast to the defendants of these cases, where I know their names and their addresses but I can't say much about who is evicting them" said Hepburn, of the Eviction Lab. "That speaks to a real imbalance of power that is reified and reinforced by the court systems that grant levels of anonymity to landowners and landlords."

AN ALTERNATE PATH

In Milwaukee, publicly available information is the only reason Foley was able to direct her op-ed at the right person: Joe Berrada. Becoming the face of a city's eviction crisis, after all, makes the price of doing business a lot steeper.

Foley sees the relationship she's brokered with Berrada as a potential blueprint for the rest of the country; an alternate path that could keep people in their homes and reduce the hegemony of corporate landlords. Today, when Foley works with tenants who need housing but have past evictions on their record, she often refers them to Berrada, one of the only landlords in the area who will offer them a lease.

Foley's organization and another housing organization called Community Advocates have also worked with Berrada to obtain emergency rental assistance from government coffers. In the case of Pollard, the 26-year-old facing an eviction in June, the three entities worked together to buy her more time to move and then helped her move into a more affordable Berrada-owned apartment.

"I think everybody's been surprised by some areas of common ground and that advances a lot of good things for tenants," said Foley. "I think the pandemic makes it clear we have to go at this differently, this crisis makes it so glaringly apparently that the current formula does not work. We've got to do better."

All of this has helped rehabilitate Berrada's reputation in Milwaukee. It's also been good for business: when tenants get money, Berrada also gets money.

While many Berrada tenants have been relieved by the shift in tone, they're wary of what happens when the CDC moratorium is lifted and their plight falls off the news cycle.

"I'd be homeless if it weren't for Berrada," said 29-year old Tevin Buckner who Community Advocates helped with months of back rent owed to BPM through the new cooperative systems after he lost his job at the beginning of the pandemic. "Without him agreeing to it, we'd be screwed."

But like many Americans, Buckner is still unemployed and no more able to pay rent now than he was several months ago. He wonders whether Berrada is truly turning over a new leaf or whether it's a political stunt that will end when the cameras stop rolling.

"I won't lie to you and say my fear ain't there still. He's gonna evict, I don't have any doubt that he's gonna evict, because that's what he does," said Bucker. "And the governments gonna let him, the states gonna let him. But what can you do? They already allowed him to buy up all this property."