Why does everyone hate Michigan so much?

Investor · Denver, CO · Member since 2015 · 23 posts · 8 votes

I'm trying to understand why so many people stay away from investing in Michigan? There are homes everywhere for 30k. I realize there is no appreciation, but the cash flow seems great. $700-$900 a month in rent for a 30k investment. What am I missing? Maybe I've just listened to too many podcasts with @Brandon Turner and @Joshua D.

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I invest in Detroit and Detroit suburbs BECAUSE the appreciation is better than ANYWHERE else!

The amazing cash flow is gravy.

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George P.
Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
10y
who cares. so many threads Like this.
1 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
10y
Quick answer: Many people think Michigan is in Detroit.
Oh, and there is appreciation. In some areas, high appreciation.
4 Reply
Andrew Wong
Investor · Milpitas, CA · Member since 2015 · 278 posts · 155 votes
10y
@Chad Harter, what type of properties are these? C? D?
0 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
10y
Maybe Michigan is tenant friendly. You do not want to invest in that business environment.
0 Reply
Josh Kundrat
Chicago, IL · Member since 2015 · 77 posts · 39 votes
10y
I'm not really sure, but not everyone lives in the Midwest and can properly manage properties there. I personally have thought for a while that Michigan and Detroit specifically represented significant bargain.
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Joshua Kapp
Homeowner · Lansing, MI · Member since 2016 · 24 posts · 6 votes
10y
Greg S. What do you mean by tenant friendly?
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Joe Semifero
Engineer / Program Manager / RE Investor · Dexter, MI · Member since 2015 · 86 posts · 30 votes
10y
@Joshua Kapp - I think @Thomas S. is wondering or guessing. I don't think Michigan is particularly tenant or landlord friendly, although I have heard some municipalities or judges can be more supportive of tenants than others. I think that is true is a lot of places.
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Joe Semifero
Engineer / Program Manager / RE Investor · Dexter, MI · Member since 2015 · 86 posts · 30 votes
10y
@Chad Harter - where are you seeing the $30K houses? Michigan has some great areas and some dicey areas. A lot of the articles on BP about lower price houses talk about the issues that go with them - things like higher turn over, costs for some things being the same as higher prices units, etc. Personally, I think there is good and bad in all levels. I have lower cost places and some fantastic tenants. I've also had some evictions and other issues.
I think @Josh Kundrat is right and many people aren't close enough to manage properties well from long distance, especially those with the potential for additional problems. Given that, with the team I have now, I wouldn't be worried about long distance, but you do need boots on the ground for any long distance management, either partners or contractors.
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Joshua Kapp
Homeowner · Lansing, MI · Member since 2016 · 24 posts · 6 votes
10y
Joe Semifero thanks for the clarification Joe. I agree I don't see many 30k houses maybe farther north into flint possibly.
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Account Closed
Real Estate Agent · Flint, MI · Member since 2015 · 270 posts · 71 votes
10y
Chad Harter I think a lot of people worry about the crime rate based on numbers and really only reflective of certain areas. Michigan as Joe Villeneuve mentioned gets a bad rap because of the crime which is not a good representation of the entire state or the entire city where the rates are higher. But that is the case in any state actually. Here we get spotlighted because since GM has pulled some factories our unemployment rate is higher than most states, which should be expected with a few cities supported solely by GM its workers and smaller businesses that relied on their spending, thus crime increases. There are very VERY nice areas even within the high crime rate cities here in Michigan. Also there are A, b, C, and D class neighborhoods here as there are in most other states and cities. @joe semifero hit it dead on most investors invest from out of state and don't have boots on the ground here. And that's where I come in! I work with a couple of California investors and offer my expertise in my hometown of Flint. Also @hoshua knapp yes there are many houses for $30k and under and up especially here in Flint and Dertroit with that being said some parts of Michigan serve to be very supportive of an investors buy/hold portfolio as opposed to trying to flip in these areas. My boots are on the ground, people are buying here and I stay busy helping investors make wise choices in my city Flint, Detroit and in between. Fear of the unknown can sometimes be a diamond in the rough with the right team in place.
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Aaron Jordan
Detroit, MI · Member since 2016 · 12 posts · 3 votes
10y
I'm actually a new wholesaler investor here in the Detroit area but I've lived here all of my life and I have noticed a lot of the buyers I've connected with don't want property in the city. I know for a fact that there a LOT of nice properties in decent areas with deep discounts in Detroit that would make for good cash flow but have been curious myself as to why these investors say they want to stay clear of the city. Is it because they don't know these areas well enough to be confident or is it because they have the capital to spend more for the property outside of city so they feel they don't have to bother? Because I am new to this I myself am curious and it would be good info to understand the mind of these investors.
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Account Closed
Contractor · Columbus ohio · Member since 2015 · 90 posts · 42 votes
10y
I think alot of it has to do with the people that they have worked with, property managers,contractors, agents. Detroit has a high concentration of bad ones and once word gets out, I think other investors do not want to go thru it. There are good and bad ones everywhere, but from what I've heard, there are a lot in detroit. I have yet to hear of good ones there.
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
10y
Originally posted by @Thomas S.:

Maybe Michigan is tenant friendly. You do not want to invest in that business environment.
Maybe this makes little sense?
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
10y
Originally posted by @Account Closed:

Chad Harter I think a lot of people worry about the crime rate based on numbers and really only reflective of certain areas. Michigan as Joe Villeneuve mentioned gets a bad rap because of the crime which is not a good representation of the entire state or the entire city where the rates are higher. But that is the case in any state actually. Here we get spotlighted because since GM has pulled some factories our unemployment rate is higher than most states, which should be expected with a few cities supported solely by GM its workers and smaller businesses that relied on their spending, thus crime increases.
There are very VERY nice areas even within the high crime rate cities here in Michigan. Also there are A, b, C, and D class neighborhoods here as there are in most other states and cities.
@joe semifero hit it dead on most investors invest from out of state and don't have boots on the ground here. And that's where I come in! I work with a couple of California investors and offer my expertise in my hometown of Flint.
Also @hoshua knapp yes there are many houses for $30k and under and up especially here in Flint and Dertroit with that being said some parts of Michigan serve to be very supportive of an investors buy/hold portfolio as opposed to trying to flip in these areas.
My boots are on the ground, people are buying here and I stay busy helping investors make wise choices in my city Flint, Detroit and in between.
Fear of the unknown can sometimes be a diamond in the rough with the right team in place.
Nice post...very nice post.
1 Reply
Richard Dunlop
Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
10y
Originally posted by @Andrew Wong:

@Chad Harter, what type of properties are these? C? D?
Of course these are houses made out of scrap pallets with palm frond or tar paper roofs!
Bought it for $1275 rented it for $600 month to the existing tenant who couldn't figure out why the property management company was refusing his rent when the prior landlord lost the house to foreclosure. Rent should be about $750-$775.
2 Reply
Richard Dunlop
Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
10y
Originally posted by @Chad Harter:

I'm trying to understand why so many people stay away from investing in Michigan?
...I realize there is no appreciation, ....@Brandon Turner and @Joshua D.
???
???
I invest in Detroit and Detroit suburbs BECAUSE the appreciation is better than ANYWHERE else!
The amazing cash flow is gravy.
5 Reply
Jeff Gebhart
Investor · Grand Rapids, MI · Member since 2015 · 47 posts · 20 votes
10y
We love investing in Michigan. All our properties are in West Michigan. But would look at deals on your side if they made sense.
2 Reply
Wendy PattonBusiness Member
Real Estate Consultant · Clarkston, MI · Member since 2009 · 859 posts · 349 votes
10y
I have been investing for over 30 years in my hometown as well as other area suburbs. I do not agree that there is no appreciation in the housing industry and that many people do not care to invest here. In the MREI, we have over 500 investors that are investing in Michigan and many of those do not need to look further than 5 miles from where they live to find good investments. Many of the cities have great investment opportunities if you just know where to look.
Michigan Real Estate Investors533 Reviews
Website View Page
4 Reply
Tim VandenToorn
Real Estate Professional · Rockford, MI · Member since 2015 · 301 posts · 138 votes
10y
Who hates investing in Michigan? Check the news Michigan is all the rage!
4 Reply
Peter O.
Rental Property Investor · Dallas, TX · Member since 2015 · 38 posts · 12 votes
10y
Originally posted by @Richard Dunlop:

Originally posted by @Andrew Wong:
@Chad Harter, what type of properties are these? C? D?
Of course these are houses made out of scrap pallets with palm frond or tar paper roofs!
Bought it for $1275 rented it for $600 month to the existing tenant who couldn't figure out why the property management company was refusing his rent when the prior landlord lost the house to foreclosure. Rent should be about $750-$775.
Wow..this sure makes for a very great return but am sure this was a one off type of deal and can't be expected all the time. Except as others have stated, in the wrong area. Great deal though!
0 Reply
Richard Dunlop
Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
10y
Originally posted by @Account Closed:
... GM has pulled some factories our unemployment rate is higher than most states...
.
Clarence no longer true, Michigan is below the national average in unemployment. Detroit is only slightly above the National average.
Wayne County Wages are way above the national average.
And the growth in wages is above the national average.
I keep asking myself why anybody invests anywhere else.
0 Reply
Jason D.
Investor · Rockford, MI · Member since 2013 · 116 posts · 54 votes
10y
Anytime you generalize an area or state based off stories you've heard or news clip you've seen you run the risk of an unfounded negative opinion of that area. I live in MI and only invest in west Michigan, not bc I think the other parts of the state are bad, I'm just not familiar with some other areas. Clearly there are investors excelling in those same areas.
1 Reply
Account Closed
Real Estate Agent · Flint, MI · Member since 2015 · 270 posts · 71 votes
10y
thanks for the graphs @Richard Dunlop but this also supports what I was saying that for a time unemployment was super high and that has led to the higher crime rates etc and in turn investors not spending here. But yes I am aware of the gradual turn around and that is what in my opinion makes it a great place to invest. Thanks again and great info
0 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
10y
It is true the national news media paints an ugly picture of crime, abandoned houses, wild dogs in the streets, bankrupt cities and poisonous water. Of course some of this is specific cities and some of this is in the past.
At a minimum, Michigan has a perception challenge, which is affecting their economic development.
0 Reply
Gary Hall
Investor · Muskegon, MI · Member since 2015 · 35 posts · 16 votes
10y
I think Michigan gets a bad rap because of WHO buys the 30k homes. I just bought a home for 16,500 from an "investor" The home cash flows beautifully. I love the neighborhood and will keep if for years.
The issue he had is that he bought it for 25k with a mortgage, couldn't handle the ups and downs of lower income rentals, had problems with evictions and couldn't rent it quickly.
At the closing table he could't stop talking about how there is no money in real estate and how the city/state makes it impossible. When you have a low barrier to entry you get people that do not know what they are doing in the mix. They will then hoot and holler when it all goes south.
Low income rentals have the best cash on cash returns but take a lot of know how to pull off. Make sure you have the right team in place.
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Why does everyone hate Michigan so much?

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Of course these are houses made out of scrap pallets with palm frond or tar paper roofs!

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Of course these are houses made out of scrap pallets with palm frond or tar paper roofs!