During one of the family’s lazier Sunday potluck dinners recently, we found ourselves watching a show on house flippers in Chicago. Since I’m the long-time resident investor, when the episode ended, some started asking how real the show actually is. One of the more interesting questions came from my niece’s boyfriend, Jamison, who said he’s been thinking about how to start investing in real estate at a young age, rather than waiting till he’s midway through some other career that he dislikes, like I did.
From the sound of things, he’d almost convinced himself that buying property to rehab and resell was the way he wanted to go after finishing his studies over at Michigan State. But, after watching several reality TV shows about investors and how much unrealistic money they seem to make elsewhere, he wasn’t convinced that investing in Michigan real estate was for him. I told him that, with a better understanding of the market and a little insight into where he should invest, making a real living as an investor here could be as good as anywhere.
Real Estate Investing in Michigan: What Does the Market Hold for 2019?
I understand Jamison’s hesitation over whether or not he should invest here in Michigan. Other than Detroit, so few of our cities make national headlines as the best places to purchase investment property. Rarely are Grand Rapids or Ann Arbor, for example, referred to when the focus of any investment-related discussion turns to the potential for realizing good real estate returns. Instead, a lot of attention is still given to the state of the housing markets along the east and west coasts—particularly the cities of Los Angeles and New York City—and how you can continue finding investment opportunities in hipster haunts like Austin. But, just because it’s uncommon for Michigan to take the spotlight doesn’t mean that you shouldn’t put your focus here.
At one time, Michigan was home to record-breaking numbers of people who either lost their homes to foreclosure or who were in danger of losing their homes due to missed payments. This was during the housing crash, of course, when most of the real estate markets around the country suffered losses so severe that the economic landscape of many American households were forever changed. Even though we weren’t hit as hard as Florida or California, Michigan’s economy continued to shift downward for years as job opportunities, and living wages, vanished. While many cities across the country started to work their way back to some semblance of stability within a few years of the crash, few in Michigan—most notably, Detroit—could claim the same until very recently.
Luckily, times have changed and so has Michigan’s economy. The food, energy, and financial sectors have grown up around the state, joining the rise of other industries like health services and information technology. And, with the expansion—and diversification—of Michigan’s job market has come the addition of thousands of higher-paying opportunities every year. About 32,000 new jobs were added by mid-2018 alone, according to the Michigan Bureau of Labor Market Information and Strategic Initiatives. Even the auto industry is on the rebound, employing nearly as many workers as it did before the crash. The result of these changes is an unemployment rate that has dropped steadily every month within the last year. Today, 96% of Michigan’s residents—only slightly less than the national average—have work, according to the Bureau of Labor Statistics.
The benefit of a well-employed population, of course, is an increase in consumer confidence and spending—particularly in the housing market. And, that’s exactly what we’re seeing in Michigan. The desire, and ability, to own a home is on the rise and the deepening demand is creating competition amongst buyers and putting a squeeze on local inventory. As a result, median home sales prices are up across the state and the number of days a house sits on the market are down. And, that’s true whether you’re looking at numbers from Wayne or Washtenaw counties. So, if you started flipping houses in Michigan several years ago, like me, or bought a few properties to hold for a while as rentals, as many of my contemporaries did, it’s likely you’ve benefited from getting into Michigan’s post-crash market early.
That’s not to say, however, that if you live here in Michigan and have only just decided that you’re right for the real estate industry as an investor, or are more experienced and coming from another market, that you’ve missed out on the best time to find great deals. Like I told Jamison, investment opportunities exist throughout the state. And, here’s where you can find many of them:
There seems to be more discussions online and around the table than ever about whether or not anyone should buy property in Detroit as an investment. Since it’s my old stomping grounds and where I’ve made my living as an investor, I sit squarely on the pro-Detroit side for a number of reasons. Unemployment, now at only 4.2%, according to the Bureau of Labor Statistics, has been declining in step with the rise of new industries coming into the city and the return of some old ones. And, as more people have gotten jobs, more families have been able to purchase homes. The number of homebuyers has increased so much, in fact, that median home sales prices jumped up and days on the market slid down again this year. The result of this growing housing demand has been a squeeze on inventory that, without a good way to generate real estate leads, could leave your portfolio looking like some of Detroit’s few remaining neighborhood ghost towns.
Although demand has increased in the area, bolstered in part by government revitalization programs like the Detroit Land Bank, there is still much to improve in the Motor City. Vacant and abandoned properties still litter the city and fewer people are still moving into Detroit than moving out. That’s set to change, however, as more of Detroit’s neighborhoods, like East English Village, are listed by market research companies like Attom Data Solutions as one of the best in the country to buy a home or invest in. In addition, some neighborhoods, like Fitzgerald and Boston-Edison, are already seeing a population increase, thanks to media attention on their up-and-coming status. In short, it’s because Detroit has come a long way, yet still has a ways to go, that it’s a great place to grow your portfolio and still have a positive social impact by investing in real estate.
The second-largest city in Michigan, Grand Rapids could easily make the state’s list of up-and-coming communities to watch—and, invest in. Nicknamed “Furniture City” because of the number of furniture manufacturers that call the area home, Grand Rapids is rapidly becoming a midwestern hub for a variety of industries. The healthcare, grocery, and education sectors are flourishing in Grand Rapids with companies like Spectrum Health, Meijer, and Grand Valley State each employing thousands of locals. Even the tech and automotive sectors are thriving. In communities, like Southtown, efforts are also underway to revitalize the business corridors to attract more employers and make those areas more walkable and safe.
Once known for having a higher-than-average crime rate than the rest of the U.S., Grand Rapids has become safe and more attractive overall. Not only has crime drastically dropped, you can now find family-friendly amenities, plenty of parks and gardens, and over 80 local breweries throughout the city—all of which have helped to foster its appeal to a wide demographic of homebuyers. In fact, U.S. News and World Report ranked Grand Rapids in the top-twenty places to live and the top-ten places to retire. Demand for housing in the area has been steadily increasing since 2015, bringing the current median home sales price to more than $187,000—higher than the median home list price—according to Realtor.com. With other markets, like Chicago, becoming increasingly expensive to live in, the allure of Grand Rapids is not likely to change anytime soon. As long as you have a way to find off-market properties for below-market value, you could find yourself in a good position to meet the growing demand and see some potentially great returns.
Being a generally more affluent part of Michigan, no one would exactly call Ann Arbor up-and-coming. But, that doesn’t mean that you should pass up the opportunity to buy multiple investment properties in the area as a part of building your investment business. “Tree Town,” as it’s often called, has seen a steady increase in median home sales prices in most, if not all, of its neighborhoods during the last several years. So, whether you buy in the more affordable community of Georgetown or the fairly expensive one of Angell, provided you correctly calculate all of your numbers you should be able to get—and stay—in the green when you sell.
But, buying property to renovate and sell isn’t your only option for realizing decent ROIs here. Home to the University of Michigan, Ann Arbor’s largest employer, the rental market is strong, too. As many as 55% of the city’s residents are renters, according to the U.S. Census Bureau. After all, not everyone—especially students—can afford to buy in Ann Arbor, nor would they necessarily want to if their stay in town is limited to a few years. That’s not to say that the population of Ann Arbor is predominantly transient. On the contrary, thanks to a significantly lower crime rate than the rest of the nation and thriving artistic and culturally-diverse pockets around town, the city’s population has been slowly growing since the last census was taken in 2010. So, while being a landlord has its pros and cons, it could very well be a smart move where the demand for rentals is high—like Ann Arbor.
It’s not just in Michigan’s largest and most recognizable cities, however, that you’re likely to locate the best opportunities for realizing potentially good returns. As I said, finding real estate deals that are worth your investment is possible everywhere—even in communities like Warren, in Macomb County, or Hazel Park over in Oakland. The key is not so much knowing where to look as it is knowing how to generate conversion-ready leads no matter where they’re located. And, believe it or not, doing that is as easy as picking up the phone.
The Best Place to Find the Best Michigan Deals is at Your Fingertips
I’ve been investing in Michigan real estate for a while now, but I didn’t get my start until I’d gone the corporate route for over a decade. When I finally admitted that I was ready to embark on the career that I’d been wanting to do since college, I wasn’t sure that I wanted to stay close to home, either. Just like Jamison, I saw big dollar signs almost everywhere except in Michigan. But, once I became an independently owned and operated HomeVestors® franchisee and learned what it really took to succeed at buying and renovating property as a professional real estate investing business, I started to see things differently.
See, although real estate reality TV shows are entertaining, what they don’t show you is how critical finding motivated sellers of distressed properties is for a successful investing business. And, for many investors, getting these qualified leads over and over again is the hardest part of the job. For HomeVestors® franchisees like me, however, it’s a lot easier. That’s because we have access to some of the industry’s leading marketing tools and resources, including the nationally-recognized “We Buy Ugly Houses®” ad campaign that reaches distressed homeowners all over Michigan and motivates them to call us. So, no matter where you decide to set up shop, finding the best deals in town is only a matter of picking up the phone when the calls come through. The rest of your success, no matter where you invest in Michigan, is up to you.
Make the call to HomeVestors to discover how you can get distressed Michigan homeowners to call you when they’re motivated to sell.