Is this the Golden Age of Landlording?
The foreclosure mess and the rotten economy have been a boon for local landlords and are encouraging more people to get into the business.
Thousands of people have moved to rentals as they discovered they couldn't pay their mortgages. At the same time, hundreds of houses, duplexes and apartment complexes owned by overextended homeowners and landlords have come on the market at a discount.
And low interest rates continue to beckon.
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"If I could get myself unbusy, I'd go buy 40 or 50 more houses," said Kevin Kimmel, who already owns more than 100 units.
Opinion was split among the dozens of independent landlords at last week's barbecue dinner at Kiwanis Park Recreation Center on West Second Street.
There were the usual worries about the legal requirements to remove problem tenants and their belongings. And federal lead paint regulations have caused a lot of frustration.
But all in all, it was a jovial occasion as the diners swapped stories of the outrageous excuses they'd heard from tenants and the fine points of insurance.
Some diners argued that the economy has taken its toll on their tenants, increasing turnover.
But others disagreed, saying that despite the usual difficulties of owning rental property, conditions and opportunities were very good.
"You got to know what you're doing, but it's hard to lose money on real estate," said James Johnson, who with his wife, Agnes, owns and operates 35 units.
Demand is up
The Wichita Apartment Guide's semi-annual survey of local apartment complexes, which came out last week, shows that vacancy rates are shrinking again in 2011 after rising from 2008 to 2010.
The vacancy rate in July was 7.8 percent, compared with 10.3 percent a year ago. That is getting close to point where landlords can raise rents.
It's part of a six-year slide in national homeownership rates, from the peak in 2005.
People in Sedgwick County continue to be forced from their homes. Foreclosure rates remain about 25 percent above pre-recession levels in Sedgwick County, although they're down from the peak of a year ago.
It's the flip side of the punishment that local landlords felt a decade ago when they dealt with both an economic downturn and the loss of tenants to single-family homes. Local apartment vacancy rates peaked at 15.5 percent in 2004.
Wichita is generally a great landlording market, according to a new study by Local Market Monitor, a national market research firm, and HomeVestors.
Based on the projected cost of housing vs. the price of rents in three years, the study showed Wichita landlords will see a 25 percent premium over the national average over the next three years.
"What that shows is that rents as a percent of the purchase price is significantly stronger than the national average," said Carolyn Beggs, of Local Market Monitor.
Landlording has become a much better deal in recent years as the price of property has dropped and the demand for renting has increased, she said. Las Vegas was rated as Local Market Monitor's best market for landlords.
Martha Ray, a long-time landlord with 15 houses, said she had turnover in almost all of her units last year.
"That's expensive," she said.
Tenants left town or moved in with family or whatever, she said, but the economy clearly played a role. This year, she said, turnover is way down.
That mirrors the experience of Emery Goad, a private investigator who does credit checks for landlords.
He said the overall tenant population has hit bottom and is not getting any less credit-worthy.
He theorizes that people who couldn't afford $500 monthly mortgage payments discovered they could afford $500 rent payments. The difference, he said, is that homeowners also pay taxes, insurance, trash service and upkeep that can easily double expenses.
These tenants, he said, have found a new, lower economic level at which they can exist.
"The recession is a godsend to landlords," Goad said.