SFH rentals in Kalamazoo vs Grand Rapids vs Fort Wayne

8 Replies

Hi there,

I'm a complete newbie to real estate investing looking to buy the first investment property. I wanted to get your thoughts on a couple of the areas I'm currently considering investing in - Kalamazoo MI, Grand Rapids MI, and Fort Wayne IN.  

Overall, I'm looking to purchase a single family home for rent. In addition to getting your overall opinions on the 3 areas, a couple of specific questions I had are:

  • Is the area "too hot" right now to the point where the rent yields are too low?
  • Is there a specific neighborhood in the area best suited for SFH investment?
  • What is the projected growth in the area like?

Are there alternative cities around the area that you'd recommend me researching into?

Thank you in advance.

    Hi Gina- I just have a quick second to reply, but in terms of competitiveness of the three markets: Grand Rapids is certainly the hottest, most competitive, and finding deals is difficult if you're only using the MLS. Kalamazoo is somewhat easier and the cash flow can be decent. From what I can tell Fort Wayne (though I don't invest there) is not nearly as competitive/hot as GR or Kzoo.

    Originally posted by @Gina Na:

    Hi there,

    I'm a complete newbie to real estate investing looking to buy the first investment property. I wanted to get your thoughts on a couple of the areas I'm currently considering investing in - Kalamazoo MI, Grand Rapids MI, and Fort Wayne IN.  

    Overall, I'm looking to purchase a single family home for rent. In addition to getting your overall opinions on the 3 areas, a couple of specific questions I had are:

    • Is the area "too hot" right now to the point where the rent yields are too low?
    • Is there a specific neighborhood in the area best suited for SFH investment?
    • What is the projected growth in the area like?

    Are there alternative cities around the area that you'd recommend me researching into?

    Thank you in advance.

     Hi Gina! Welcome to BP. 

    Grand Rapids is great because its a great market with lots of industries. However, as you mentioned the market is competitive and if it is on the MLS, it seems to be under contract in a couple days.

    As far as rent yields, it really depends what you are looking for. We are on the edge of the 1% rule these days. 

    From a cashflow perspective, you can look at Kalamazoo like Ryan mentioned above. I don't invest there yet, but there are lots of West Michigan Investors that buy there. 

    Another two cashflow cities you can look at are Lansing and Muskegon. These have a lower cost of entry and you can usually get some better yields, but not much appreciation potential. 

    I am actively investing in GR and Lansing so feel free to reach out if you have further questions. I am also a licensed agent happy to answer any questions you may have regarding the process or if you need any lender contacts, etc. 

    Best of luck!

    Sean

    Gina, I am also interested in what is available in GR and Kalamazoo. I am closing on my first property in Fort Wayne this week. The market here is very similar to what others have described, at least for those things that make it to the MLS. I have not ventured out beyond that point yet :).


    We are also right on the border of the 1% rule, with a range of prices. My wife and I looked across the board. Areas like 46807 are up and coming, if you can find the right street. There you can get older 3bed/1bath homes (1910-1940) for 55-90K that will probably rent for 500-800/month, but need some TLC to recognize as appreciation. Anything in the area that is a value is usually going within a few days with offers that have waived inspection. 

    We ended up going the opposite route for the first one and found a 3/2 in 46845 for 265K. This area has the much better school districts and the houses are anywhere from 1980 and newer. The one we bought happens to be 2015, so we paid a bit of a premium to reduce the risk of major repairs in the first few years (I know its always a possibility something happens though). We are hoping to rent for 2300/month. I'll try to reach back out once we have a tenant to let you know how successful we were :)

    There is not very much small multi-family here, and I would like to do the stack method, hence looking at GR. 

    Best of luck, Mike

    @Gina H. to answer your question it all depends on how much effort you want to put in, and what your long term goal is with the investment.

    As @Sean Sloop stated GR is hot due to the overall economic diversity and growth happening. That doesn’t mean there isn’t deals to be had. You might have to put more effort in to find the good deals. Areas of value are also Kalamazoo, Lansing, Battle Creek. 

    I have heard there is great potential in the Detroit suburban areas, but this is not my expertise so you would have to find someone from the area to provide additional insight on this. 

    Let us know if you have additional info about investing. Best of luck on investment searching.
     

    Originally posted by @Ryan Kuja :

    Hi Gina- I just have a quick second to reply, but in terms of competitiveness of the three markets: Grand Rapids is certainly the hottest, most competitive, and finding deals is difficult if you're only using the MLS. Kalamazoo is somewhat easier and the cash flow can be decent. From what I can tell Fort Wayne (though I don't invest there) is not nearly as competitive/hot as GR or Kzoo.

     Hi Ryan, thanks so much. For Kalamazoo, are there specific areas where families tend to rent the most? I saw from your profile that you have a student rental property in Vine. Based on your experiences, how do student tenants compared to families? Thanks.

    @Michael Lash , super helpful hearing your experience in the Fort Wayne area. And so helpful to have your area code breakdown. I'm not handy at all and have never worked with contractors before so would the thought of waiving inspections makes me hesitate. 

    Best of luck with the rental. It sounds great for a family with kids!

    @Drew Brown , thanks for the insight. I'm definitely willing to put in the effort to find deals. However, I do want to avoid major renos since this would be my first property. Long term goal would be at least 1% cash flow and appreciation.

    This is a very amateur question - a lot of folks have mentioned finding deals that aren't on the MLS. How do you find deals?

    Also, what is driving the growth in Lansing and Battle Creek? I know Kzoo has colleges and a couple of large corps supporting their growth.

    @Gina H. to ways you can find properties. 1 option is looking for distressed properties and cold calling or sending mailing to those distressed owners. There are companies that will do this for you as well. Option 2 is finding individuals who whole sale properties in your target market. These people are usually found through networking. Find any real estate groups or meet ups in your target market and introduce your self to everyone. 

    Finding the properties is actually step #2. Make sure you can easily and quickly calculate rental property pricing. In the market we are in today there are tons of whole sellers out there that are providing ‘good’ deals. The deals are over priced and a lot of the sellers comp the repair estimates way below what they will actually cost. 

    Continue learning, asking questions, and practicing these three things will make you a great investor.