Real Estate investors from across the country are traveling towards investment properties in Michigan to build rental portfolios. The Great Lake State is a current favorite of real estate investors due to many factors including a strong economy, affordable prices and stable rents! Easy Street Capital is proud to be a leading provider of investment property loans for real estate investors looking to build rental portfolios in Michigan!
Loan Types for Michigan Real Estate Investors
When it comes to real estate investing in Michigan, there are great market types of investment property loans to choose from. For investors that like to get their hands dirty, rehabbing run-down properties, hard money renovation loans are a perfect choice! These loans allow you to buy a property quickly and finance your rehab costs as well! Once you are done, you can either “flip” the property for a quick profit or pursue the BRRRR Strategy by renting it out and then refinancing into a long-term, low-rate DSCR loan!
Long-term DSCR Loans are also great for investing in turnkey rental properties. Turnkey refers to properties that are rent-ready and require no renovations. Move-in ready single-family homes and fully furnished short term or medium-term rentals are great for cash flow and price appreciation. Most DSCR Loans are fixed rate for thirty years, locking you into a fixed interest rate for the long-term. While, if historical patterns continue, rents and appreciation increase steadily each year. Bottom line, debt costs stay the same while cash flow increases!
Real estate investors in Michigan are pleased to find a market that does not impose prepayment penalties, offering them the flexibility to refinance without financial restrictions. While some lenders may adjust interest rates slightly higher to accommodate this flexibility, the freedom to refinance remains a significant advantage for investors.
Where To Invest In Real Estate In Michigan
Michigan is a highly favored market for real estate investors, offering a range of diverse cities that cater to various investment strategies. Ann Arbor is the state’s fifth largest city and home to the prestigious University of Michigan. Cheboygan, the northernmost city in Michigan’s Lower Peninsula, is an excellent STR market with high projected revenues and moderately priced homes. Across the lake from Cheboygan in the Upper Peninsula is Saint Ignace a solid city for short term rentals that acts as the gateway to Mackinac Island. Kalamazoo is a strategically positioned city that is equidistant from Chicago and Detroit – an up and coming city home with plenty of prime medium term rental opportunities. Lastly, Petoskey is a hidden gem market for short-term and vacation rental investors, known for its scenic beauty and lakeside charm.
Ann Arbor
Ann Arbor, Michigan is a vibrant city located in Washtenaw County, with a population of over 120,000 residents. The city boasts a strong and diverse economy, with renowned employers such as the University of Michigan, Ford Motor Company, and Google driving growth and providing a solid foundation for residents’ incomes. The presence of the University of Michigan, a world-class institution with over 51,000 students, creates a consistent demand for student housing, making it an appealing niche for real estate investors. Ann Arbor’s dynamic arts and culture scene, including galleries, theaters, and music venues, adds to its allure. The city also offers a wide range of outdoor recreational activities, with nearby parks, nature trails, and the Huron River providing opportunities for nature enthusiasts.
Ann Arbor’s strong rental market is evident, with the average market rent in March 2024 reaching $1,935 per month, according to Zillow. This makes it an attractive market for real estate investors seeking rental properties with strong cash flows and potential for solid returns. The city’s culinary scene is also thriving, with a variety of local restaurants and food festivals showcasing the area’s culinary delights.
Whether it’s exploring the University of Michigan campus, attending sporting events, or immersing oneself in the vibrant downtown area, Ann Arbor offers an inviting environment for real estate investors seeking promising investment opportunities.
Cheboygan
Located on the coast of Lake Huron, Cheboygan is a smaller city with a population just under 5,000. It is the northernmost city in Michigan’s Lower Peninsula. The city’s main economic sectors include tourism, modest lumbering, farming, and fishing (which remains an economic mainstay despite the invasion of the Sea Lamprey). While the decline of the lumber industry has lead to a paralleled drop in Cheboygan’s population, the city’s identity has begun the shift to an ideal tourist destination. Cheboygan is an excellent market for short-term rental investors.
Cheboygan offers a vibrant cultural scene and a host of engaging events throughout the year. One of the city’s most prominent cultural highlights is the annual Cheboygan Waterways Festival, a week-long celebration that showcases the area’s maritime heritage. This event features boat races, watercraft displays, live music performances, and a diverse range of delicious local cuisines. Moreover, Cheboygan takes great pride in its arts community, with several galleries and art centers promoting the works of local artists and hosting art fairs. The city’s proximity to several ski resorts and snowmobiling trails make it an excellent year-round destination. No city captures the best of Michigan’s northern charm quite like Cheboygan.
Don’t just take our word for it! AirDNA‘s projected annual revenue of an average Cheboygan home operated full-time as a short term rental is $63,000. While this revenue figure alone is significant, it is even more impressive when you factor in that the average home value sits around $204,000 in February 2024, according to Redfin. With relatively low risk from a regulatory perspective, this city has the potential to be a true short term rental goldmine!
Saint Ignace
Located about twenty minutes north of Cheboygan, Saint Ignace is a humble city of 2,300 located in the Upper Peninsula. Founded in 1671 by French Jesuit priests, this city has blossomed into a quiet, picturesque getaway on the northern side of the Straits of Mackinac. This market is a little bit off the beaten path and may be one of Michigan’s best kept secrets when it comes to STR investment. The economy of Saint Ignace is primarily driven by tourism, given its strategic position as the gateway to Michigan’s famous Mackinac Island. As a result, the city hosts several mid-sized businesses catering to the needs of tourists, including hotels, restaurants, souvenir shops, and ferry services to the island. The tourism industry not only sustains local businesses but also provides employment opportunities for the community. Additionally, Saint Ignace benefits from its proximity to natural resources, such as fishing and recreational activities, which contribute to the local economy.
Apart from its thriving tourist economy, Saint Ignace boasts a rich cultural heritage and hosts several unique events that draw visitors from far and wide. One of the most prominent attractions is the annual Mackinac Bridge Walk, an iconic Labor Day tradition where thousands of people come together to walk the 5-mile-long Mackinac Bridge, which connects the Upper and Lower Peninsulas of Michigan. The city is also home to the St. Ignace Car Show, an exciting event that showcases a stunning display of classic and vintage automobiles, attracting car enthusiasts and spectators from all over the country. For history enthusiasts, the Museum of Ojibwa Culture offers a fascinating insight into the lives and traditions of the Native American Ojibwa tribe, adding a cultural dimension to the city’s charm. With its blend of economic vibrancy and cultural allure, Saint Ignace, MI, remains a captivating destination for both tourists and residents alike.
According to AirDNA, this city earned a perfect score of 100 for “investability”! The average value of a home in this market is $166,000 and the expected average annual revenue for a full-time STR in the area is roughly $53,600. It is important to note that while economic opportunity here is high, there is somewhat of a regulatory hurdle that investors must take into consideration. There is a hard limit of permits issued for STRs in certain residential districts. Short term rentals that are not owner-occupied in residential zones are required to obtain a zoning variance from the Zoning Board of Appeals. Individuals are limited to three such permits.
Kalamazoo
Kalamazoo is a lively city located in the southwestern region of the state. This city of roughly 75,000 strong is equidistant from Chicago and Detroit. The city’s economy is characterized by a mix of manufacturing, education, healthcare, and technology sectors. The pharmaceutical giant, Pfizer, has a significant presence in Kalamazoo, operating one of its largest manufacturing facilities in the area. The city is also home to Stryker Corporation, a leading medical technology company known for its innovative medical equipment and products. Furthermore, Western Michigan University, a major research institution, contributes significantly to the local economy through its educational programs and research initiatives. Kalamazoo’s business landscape fosters growth and attracts a skilled workforce, making it a hub of economic activity in the region.
Kalamazoo is an excellent market for medium term rental investors due to the presence of multiple hospitals, pharmaceutical research institutions, and pharmaceutical manufacturers. With healthcare playing such a prominent role in the city’s economy, there will always be medical employees, post-docs, or other contract workers in need of accommodation for a medium term stay.
Kalamazoo is not only thriving economically but also boasts a rich cultural scene with various events and points of interest. Investors operating an STR in this city full time could expect an average annual revenue of about $29,200, according to AirDNA. With typical home values reaching over $219,500, investors can take advantage of the overall affordability of this growing market. Among the cultural attractions this city has to offer is the popular Kalamazoo Beer Week, attracting beer enthusiasts from across the country to indulge in the region’s craft beer offerings. Additionally, the city is renowned for the Kalamazoo Civic Theatre, one of the oldest and most respected community theaters in the United States, putting on exceptional performances and engaging the community in various theatrical productions. With its thriving economy and vibrant cultural offerings, Kalamazoo, MI, continues to be a destination that seamlessly blends business opportunities with artistic and recreational experiences.
Petoskey
Petoskey is located on the southern shore of Little Traverse Bay, a bay of Lake Michigan, and captivates visitors with its scenic beauty, charming downtown, and rich architectural heritage. The city’s downtown area boasts a thriving arts and cultural scene, with galleries, museums, and theaters offering enriching experiences. Outdoor enthusiasts are drawn to Petoskey for its abundance of recreational activities, including fishing, boating, and hiking in the nearby natural wonders of the area.
The unique combination of cultural offerings, natural splendor, and outdoor recreation opportunities positions Petoskey as an alluring destination for short-term rental investors. Visitors flock from nearby cities, such as Detroit and Grand Rapids, seeking weekend escapes and extended vacations. Rental rates remain stable throughout the year, with peak seasons during the summer months when travelers are drawn to the city’s picturesque setting. Furthermore, Petoskey hosts a variety of events, such as the Petoskey Wine Festival and the Festival on the Bay.
AirDNA, the leading data provider for investors in short term rentals, gives Petoskey a market score of 91/100 on “investability”, making it one of the best places to invest in short term rental properties. Investors can expect annual revenue of over $70,200, an incredibly high amount when compared to the median sale price of a home of $65,000 as of February 2024! Investors that use DSCR loans from a forward-thinking lender like Easy Street Capital that qualifies the income of the property using AirDNA projections can likely rake in the cash flow.
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Ready to invest in real estate in Michigan? Easy Street Capital is a top lender for loans for rental properties in Michigan, both hard money rehabs and long-term investment properties.
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