I’m proud to call the state of Michigan my home. I was born and raised here, even went to school at the University of Michigan. So, obviously, I’m a big Detroit Red Wings fan. But, I’m also a fan of the Great Lakes, the Upper Peninsula, where I go camping every year, and the Silver Harbor Brewing Company, which won a gold medal at last year’s Great American Beer Festival. That’s not to say that I haven’t considered living and working somewhere else, because I have—especially when the housing bubble burst. But, as I started to watch the state of Michigan’s economy change around me, I began wondering if I should buy an investment property. Staying close to home seemed a smart way to go and I’m glad I did. If you are wondering whether flipping houses is a good business in Michigan, I’d like to tell you “Yes, it is!”
The State of Flipping Houses in Michigan
Michigan was by no means the worst-of-the-worst states hit by the crash, but, it didn’t fare so well either. You might remember that Michigan had some of the highest foreclosure rates and the number of homeowners late on their mortgages skyrocketed. And, most of that foreclosure activity belonged to the city of Detroit. Thereafter, things only got worse. Between 2009 and 2014, timely mortgage payments continued to plummet in correlation with receding incomes and job opportunities, pushing more families out of their homes. Of course, that’s when I started investing in real estate and revitalizing neighborhoods.
Thankfully, you can’t keep a good state down. Employment in the service, financial, and government sectors has been on the rise recently and is quickly replacing the jobs lost in our more traditional industries. Opportunities are increasing in the education and health services sectors as well, with organizations like the University of Michigan—my alma mater—leading the pack. The result is that Michigan’s unemployment rate dropped to 4.7% by 2017, according to the Bureau of Labor Statistics, and has been holding steady since. In some communities, like Ann Arbor and Grand Rapids, the percentage of people without work is even lower at 3.1% and 3.5% respectively. Even the Detroit metropolitan region has seen significant job growth; more than 23,000 jobs were added within the last year alone.
With the stabilization of Michigan’s economy has come the increased ability, and interest, in homeownership across the state—bringing a welcome boon to the housing market. In Detroit, median home sales prices were up by 6.6% in January to $162,000 from the same time last year, according to Crain’s Detroit Business. In Grand Rapids, the median list price rose to almost $165,000 in February from $119,000 in February of 2015, per Realtor.com. In the more affluent Ann Arbor, median home list prices have jumped by almost $100,000 to over $351,000 during the same time frame. And, home sellers are getting close to asking price, in large part, because the supply of new and move-in condition homes has not kept up with demand.
With inventory struggles looming large in high-demand cities throughout the state, deciding if you should buy investment property or not here in Michigan—especially with home prices on the rise—is still an easy choice to make. First, there will likely be homebuyers who get pushed into communities in counties like Oakland and Macomb because they’re getting priced out elsewhere. So, starting a real estate investing company that serves these areas could be a good move. Second, the inventory squeeze that’s pushing the prices of new and move-in condition homes upward doesn’t necessarily reflect the financial distress and embarrassment that the homeowners who haven’t listed their homes feel. Job loss, divorce, illness, and death are just a handful of reasons that cause people to want to walk away from their mortgage obligations. If you have a way to find these motivated sellers, then you’ve got a way to realize decent returns by flipping their houses to meet the growing demand of buyers. That, of course, brings me to my third point.
Find Good Flips in Michigan and Scale Your Business
I really kind of fell into flipping houses in Michigan by accident. A few years after I graduated college, and over a couple of glasses of beer, my dad offered to help me buy my first house. He gave me enough to make a downpayment and I chose a fixer-upper that I could live in and rehab. Originally, my goal was to stretch the money as far as I could by doing most of the work myself and to live there until I found a higher-paying job that justified moving. But, I really dug transforming that house. And, when it was time to put it on the market, I was surprised by how much I gained by selling. The investor in me was born.
But, I obviously couldn’t scale a real estate investing business by buying houses, living in them, then selling them after I handled the renovations. So, I decided to become an independently owned and operated HomeVestors® franchisee. When I did that, I got access to HomeVestors’ marketing and lead generation tools that bring motivated home sellers in distressing situations to me, so that I can buy, renovate, and sell in fairly short order. It’s a pretty sweet deal, if you ask me. And, it’s one that you can take advantage of no matter what part of Michigan you want to invest in.
Are you ready to start flipping houses in Michigan too? Contact HomeVestors to learn more about franchise opportunities.
Each franchise office is independently owned and operated.