MARKET & TRENDS
MICHIGAN
6 Reasons to Consider Michigan for Your Next Investment MICHIGAN IS STILL A SOLID INVESTMENT CHOICE.
by Jeff Roth
nvestors who are looking to invest in a location more than
$100 a month. So, let’s assume a monthly income of $1,700. This investor is using a DSCR loan with interest rates above 7% for a fixed-rate 30-year loan, to be conservative. There are ARM options and interest-only options to make this deal even better until interest rates lower, but we are being conservative in the numbers to make a point. The all-in payment with principal, interest, taxes, and insurance is $700 a month. Using an established property management company in the area that charges 11-12% of gross rents (because they are high touch and manage the property for tenant retention) adds about $200 a month for property management. The positive cashflow on this one property alone is $800 a month. That’s right, $800. That covers a lot of maintenance and vacancy loss as well as lifestyle for the investor. With 20% down, the initial investment is not nearly as much as it is in other areas of the country and, in a short time, the investor can pull out equity and go shopping again. How many of these rentals do you need for your balance sheet to be healthy, change your life, and also provide affordable housing for others?
Strong cashflow equals housing demand.
I
an hour’s drive from their house might be concerned about making the right choice. Certainly, there are many places with positive indicators for real estate investing today, and one of those is Michigan. What makes Michigan attractive? It meets the following six criteria for any market in which you may consider investing. NO. 1 Strong Cashflow Yes, you can still buy cash-flowing property in Michigan. In fact, investors can find strong cashflow in nearly all real estate categories from multi-unit to self-storage to single-family rentals to mobile home and RV parks. Rents have increased, but the acquisition costs compared to other locations nationally are lower, which makes cashflow stronger. As just one example, an investor is buying a duplex in a very investor- friendly market with a strong local economy for $80,000. That’s right— $80,000. Both units together will rent for $1,600 a month, conservatively. The garage can be rented for another
NO. 2 Respectable Appreciation Although not every community has experienced double-digit appreciation lately, it has been respectable across the state. According to Redfin, home prices in Michigan in June 2022 were up 9.9% on average from this time last year. Redfin also states that Detroit saw an average appreciation of 32.3% from June of last year to June 2022. Other Michigan cities like Grand Rapids saw a 10% average appreciation for June 2022 over this time last year. Finally, Ann Arbor saw an average price appreciation of 7% from June of last year to June 2022, according to Redfin. Housing appreciation equals housing demand. NO. 3 Landlord-Friendly Governance Property rights are respected. Most communities in Michigan take a balanced approach between the rights and needs of landlords and those of tenants. They understand
66 | think realty magazine :: september - october 2022
Made with FlippingBook Online newsletter