I'm starting to look into investing in buy and hold properties in Jackson MI. What areas should be avoided and where are the hot spots for great cash flow with decent tenants. Also why would Jackson be a good area to invest in? What's with all the hype with investing in Michigan? Can't wait to hear your thoughts.
Not sure about Jackson, MI. My partner lives there and she might invest there, but there are other areas that are better not far from there.
The hype in MI is simple. Buy low, ARV high enough for flipping and more importantly refinancing. Higher rents per sq ft, lower property taxes. All of this makes for the ability to get very high CAsh Flow, with a PM and refi mortgage in place...and the opportunities are many.
I work with a number of California investors that flip in their state, but can't do much in the way of holds since they would need to rent their 1000 sq ft 3/1 for over $3k to make it cash flow with the above stated conditions.
Here, you could take that same $50-70k, and buy a house, all cash and refi, that will cash flow over 300-400/month.
@Joey Noel , I would be really careful with Jackson. I work there and have been tempted many times by potential deals there, but have realized they will be extremely high maintenance tenants and properties. The economy there just doesn't seem stable at all.
In my explorations, I talked to one property manager who said she was selling everything in the city itself partially because the city has instituted expensive rental registry/inspections.
Not saying it can't be profitable, but expect a lot of expenses.
I'd say to definitely avoid the area directly south of downtown.
@Brett Russell you are right to stay away from the area south of downtown. But I have to disagree with a couple of your points.
I'm wondering where you get the idea of high maintenance tenants. Granted, I have only been renting out properties in Jackson for a little over a year, and I only have 4 units rented, My tenants have not been high maintenance.
The city of Jackson Definitely can be annoying with their inspections programs, but if you go in an remodel the place you won't have to worry much about this. No, you can't get away with having broken windows and all of them have to have screens. They even made me power wash the vinyl siding on one of my homes that I thought looked pretty good. I was pissed. But honestly I think in the long run it's for the best. If you stay West of 4th ave in you investment ventures there are a lot of B to A grade properties that are good investments.
The positive - low vacancy. I interviewed several property managers and all of them boasted that they have a less than 2% vacancy like it was something they accomplished. No. The area does not have a lot of product available for rent so if you have a decent single family that meets all the cities codes it WILL rent in no time. The rent to values are consistently above 1% and often above 1.5%. If you go into the C grade neighborhoods you can easily get above 2% but I stay clear of those because I would like to be able to sell my home if I want.
projected opportunity - The Jackson market has lagged behind the other midwest booms. While 2013-2014 was the time for rising prices for Grand Rapids/Kalamazoo/Lansing (and still rising) Jackson has just started to see this happen. This city has always been this way and I'm not sure why. Anyway, there is actually a good opportunity for flips now even though I prefer the buy/rehab/rent/refinance/hold method.
Don't be scared, have confidence, and take a look at the market yourself. There is a small window of opportunity in any city to take advantage of the growth period. I personally think that time is now for Jackson. I could be wrong. But I'm literally betting most of my money that I'm not. I'm still kicking myself from backing out of a couple of deals in Ann Arbor in 2011-12. Imagine how I felt. Don't be like me.
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