Why Invest in Michigan Real Estate?
Michigan, which is home to almost 10 million people, 3.8 million of which live in the Detroit metropolitan area alone, is known for several things:
- Its proximity to 4 of the 5 Great Lakes
- Its unique shape, which makes it one of the more recognizable states in the country
- The car industry
With over four thousand factories, including those owned by Chrysler, Ford and General Motors, the city of Detroit is known for being a manufacturing powerhouse in the US. The Motor City is also an established leader of health care economies in the country. What’s more, tourism thrives in Michigan, from lazy days lounging by lakes to gambling at casino resorts in downtown Detroit. Detroit’s diverse economy makes it a prime spot for real estate investors, since new jobs and steady wages drive real estate demand.
While the state was hit pretty hard by the economic recession in 2008, the Wolverine State is staging a major a comeback. Michigan typically gets a bad reputation due to Detroit’s crime and Flint’s water quality issues. But the state government’s focus on repairing its reputation, coupled with a new wave of real estate investors, means there’s nowhere to go but up.
Investment Considerations for Michigan Real Estate
There are a number of factors to consider, including:
- Affordable Real Estate – With median price for homes over $80,000 lower than the median national value, Michigan is a great option for experienced and novice real estate investors alike due to its affordability and strong rental market.
- Above Average Property Taxes, But Other Taxes Are Low – Michigan’s property taxes are high in comparison to the national average, but this is offset by the fact that there are no city or country taxes. Personal income taxes are some of the lowest in the country, and there are no estate or inheritance taxes. In addition, everyone who lives in or visits Michigan pays a flat 6% sales tax, of which prescription medications and newspapers are exempt. So while property taxes may be high, they are offset by tax breaks elsewhere.
- Erratic Weather – While Michigan experiences a marked difference between all four seasons, it’s also known for a highly erratic weather, and harsh, cold winters. As such, it’s not a haven for retirees, but it is a popular tourist destination for boating in the summer, and skiing and snowboarding in the winter. This presents opportunity for real estate investors looking to build out a portfolio of seasonal rentals.
- Opportunities to Grow – There’s no skirting the obvious: Michigan isn’t perfect. Cities like Flint and Detroit keep making headlines due to poor water quality and high crime rates. But with new development programs on the horizon, low corporate taxes, and tech companies like Detroit Labs, Ambassador and StockX expanding into Detroit, there’s the potential for great ROI on residential real estate as property values increase, as does demand for rental properties.
What are the Best Markets to Invest in Michigan
Michigan’s low living expenses and housing costs are highly appealing to many Millennials. Detroit is a great option if you don’t have a lot of capital, and are willing to invest some time into researching up-and-coming neighborhoods. Beverly Hills, Franklin and Birmingham are all suburbs of Detroit, and great options due to their proximity to the city, without the fast-paced lifestyle that’s typically associated with living downtown. And if you prefer to purchase outside of Detroit all together, Ann Arbor, Novi and Troy are worth considering.
While many retirees prefer to live in warmer states, Grosse Pointe Shores and Bingham Farms are extremely popular for those who enjoy marked changes in seasons. Both are small, closely knit communities, with little-to-no crime and above average rental prices.
INVESTimate® is the leader in residential real estate investment. With the use of big data and machine learning, we analyze information on millions of single family homes in Michigan; and across the United States and calculate home values RENTestimate for every property in Michigan. If you’re looking for the best investment properties across the country, visit our comprehensive investment site.