In an era where housing stands at the forefront of many socio-economic debates, a keen look into the U.S. Census Bureau’s data for Wisconsin sheds light on an intricate and multifaceted landscape. As of July 2022, Wisconsin housed a total of 2,770,583 units. Beyond this number lies a complex tapestry of homeownership, renting, and the potential for private investments.

1. Homeownership vs. Renting: Where Does Wisconsin Stand?

At 67.4%, Wisconsin’s owner-occupied housing rate signals the enduring appeal of homeownership. Yet, therein lies a gap—nearly a third of the state’s population finds solace in rented homes, revealing a compelling space for private investors, especially those contemplating entering the landlord domain.

2. The Economic Landscape of Housing in Wisconsin

Understanding the broader financial terrain is crucial. The median gross rent from 2017 to 2021 stands at $916. Given the median value of owner-occupied housing units is $200,400 over the same period, many find purchasing homes accessible. However, it’s important to consider the national context. According to calculations by Business Insider, the average borrower acquiring a mortgage in 2023 will face a monthly payment of around $2,823 for a 30-year fixed-rate mortgage and $3,724 for a 15-year fixed-rate mortgage. This means that the rent average of $916 is far below the mortgage rate all but eliminating incentive for private investors to become landlords. These figures highlight the broader financial pressures on homeowners, further emphasizing the importance of a stable rental market in Wisconsin.

3. The Eviction Moratorium: A Deterrent to Private Investment

The eviction memorandum, introduced during the Covid-19 pandemic, aimed to protect vulnerable tenants from homelessness during one of the most challenging economic times in modern history. However, the flip side of this well-intended legislation meant landlords faced considerable hardship. Many landlords, deprived of the rental income they depended on, found themselves taking up second or even third jobs just to meet mortgage payments and safeguard their credit. The poignant irony is evident: while some tenants lived rent-free, landlords labored arduously, supplementing lost income. This experience sent a concerning message to potential investors – that government intervention can effectively force property owners to subsidize non-paying tenants, making private investment in housing appear a perilous venture.

4. The Double-Edged Sword of Private Investment

Private investment in rental properties presents both allure and challenge. The potential financial incentive seems to be almost non-existent in the present landscape considering the average new mortgage at $2,823 and the average rent at $916.00. Furthermore the road is riddled with deterrents, primarily the unpredictability of maintenance, repair costs, and legal costs.

5. The Daunting World of Repairs: A Major Deterrent

A significant roadblock for potential landlords is the looming repair costs. With contractors charging up to $150.00 an hour, minor damages can escalate into substantial financial burdens. These costs, especially for the unseasoned investor or the small-scale landlord, can and should deter entry into the rental market.

6. Wisconsin’s Statutes 704.07(3)(b) and 704.07(2)(a)1: Debunking Misconceptions

Wisconsin’s statutes present layers of complexity that can deter would-be landlords. Statute 704.07(3)(b) stipulates tenants’ duties concerning repair. While many assume the landlord shoulders all repairs, the law states that tenants must maintain parts of the property, including plumbing, electrical wiring, machinery, and equipment, if the repair costs are “minor” in comparison to the rent.

What does “minor” mean in this context? Given the phrasing, an argument can be made that “minor in relation to the rent” implies costs “less than the rent.” For a landlord charging the state’s median rent of $916, a repair less than $916 is considered to be minor and a repair of more than $916 would be considered major.

Furthermore, Wisconsin state Statute 704.07(2)(a)(1) emphasizes tenants’ responsibilities, highlighting that the Landlord must: “Keep in a reasonable state of repair portions of the premises over which the landlord maintains control.”. This means that the portions of the rental unit the tenant controls has a responsibility to make repairs if the repair is less than the rent.

This statute underscores that tenants have a distinct duty to repair parts of their rental over which they have control.

7. The Importance of a Balanced Legislative Environment

A thriving and equitable housing market demands a balanced legislative framework. The potential pitfalls, combined with legislative ambiguities, can deter private investment.

However, with thoughtful action, the landscape can be transformed:

• Clarifying Ambiguities: Misunderstandings frequently arise among tenants regarding their responsibilities for repairs within their rental units. By providing clearer education and emphasizing a sense of responsibility and ownership of one’s living situation, we can foster a harmonious environment with fewer disputes between landlords and tenants. In turn, this clarity and stability can make the prospect of private investment as a landlord more appealing.
• Promoting Tenant Education: An informed tenant is an asset. Efforts to educate them about their responsibilities can lead to better-maintained properties and subsequently reduce costs for landlords.
• Support Systems for Landlords: Offering resources, courses, or seminars can aid aspiring landlords in navigating the intricacies of property management, making investment more appealing.

8. The Broader Implications: Societal and Economic

Encouraging private investment extends beyond pure economics. A balanced housing market fosters community cohesion, ensuring diverse demographics access suitable housing, thereby enriching Wisconsin’s socio-cultural fabric. Additionally, a robust rental market can stimulate economic growth, benefiting myriad sectors linked to housing.

Conclusion: The Path Forward for Wisconsin

Wisconsin’s housing market, rich in both homeownership and renting potential, awaits harnessing. A harmonious environment where tenants and landlords clearly understand their rights and responsibilities is key. The lessons from the eviction memorandum must be taken to heart, and balanced measures need to be introduced. With strategic legislative reforms and concerted efforts, private investment can transform from a risky venture to a rewarding opportunity in the Wisconsin housing landscape.