- Michigan has a lot of diverse advantages going for it
- When my lead gen business starting very early giving me great cash flow, I looked at real estate to invest in
- Airbnb: a good way to invest real estate money in Michigan?
- The data does not support the Airbnb investment model
- Agriculture is big in Michigan
- Choosing agribusiness investment property can be challenging
- Michigan is an outdoor recreation bonanza
- So is commercial property the way to go for real estate investment in Michigan?
- Retrofitting commercial buildings is costly
- Detroit is recovering….maybe
- Is Michigan real estate investing making money or a social gathering?
- Taxes in Michigan are a big problem for investing
- That was when I discovered the lead gen coaching program Dan has written and was working every day
- My business investments average 80-90% return. Consistently. For four years.
Michigan has a lot of diverse advantages going for it
Home always holds lure, and since I grew up in Detroit, I still have a big soft spot for all things Michigan. Michigan has a lot going for it – revitalizing cities, resilient farmers, great pro and college sports teams, and tons of outdoor activities. Michigan also is home to large and diverse manufacturing and commercial interests that range from mining to car manufacturing to agriculture to major tourist destinations in the UP. That is Michigander speak for the Upper Peninsula. You know, that thumb looking thingy above the mitten? That.
When my lead gen business starting very early giving me great cash flow, I looked at real estate to invest in
One of the challenges in Michigan real estate investment is the diverse types of property available, most requiring various amounts of rehab and renovation. Sure, you can buy a house to flip and fix it up pretty easy, and you might not sit on it for too long. But how long will you be sitting on a piece of commercial property or a farm?
Airbnb: a good way to invest real estate money in Michigan?
Residential property is always interesting when it comes to how people plan to get a good return on their investment. One thing being pushed by real estate investment groups for Michigan property right now is using homes as rental units through Airbnb. Heba Baker pushes that potential in Michigan Real Estate Market 2018: Can You Make Money Investing Here?, August 19, 2018 on mashvisor.com. Baker does a good job of hitting stats on the large cities including Lansing, Grand Rapids, Kalamazoo, and of course, Detroit.
Lansing stands out for really cheap median house prices in the market at $107K last year. Baker claims that you can get a rental return of 8.95%, making a return of over $2K a month. That does sound appealing, until you realize the occupancy is left out of those figures. Who goes to Lansing with any regularity besides for football?
Grand Rapids has a tight housing market, and outside Lansing, there is no city mentioned whose ROI is over 1.54%. That is, unless you are putting people up in $80-90K homes in suburbs of Kalamazoo that are sort of questionable. Then you might get 4-5%., maybe. If you are lucky.
The data does not support the Airbnb investment model
If you really want some techie data, Airdna’s Marketminder, the leader in plotting returns, occupancy, average rental night fees, and the like, can provide it. Take a look at Michigan’s famous north shore, nestled on Lake Superior. Even Airdna shows average occupancy of rental property running around 40%. So, take that $2040 per month “revenue” and not even taking out for housekeeping, taxes, upkeep, you name it, let alone the person that has to manage the property. That drops the “revenue” to $816 per month on an average. I make that much on one lead gen rental per month.
All this rental magic return talk never addresses once you buy the homes what you have to put into the homes to get them into rental condition. No information is shared about what is so attractive about Kalamazoo, Lansing, or Detroit. Sure, Wayne State is in Detroit, Michigan State is in Lansing, and Western Michigan is in Kalamazoo, but outside of freshman orientation and graduation and a few Big 10 games at MSU, there is not a lot of happening stuff going on here. Two weekends a year is not going to get you a return on your cash real estate investment.
I regularly have an 80-90% profit margin on my lead gen properties. Why would I tie up a couple $100K in a house in a who knows neighborhood praying someone needs a rental? That does not even compute with me. I like my 80-90%, direct deposited monthly, residual income off my “virtual real estate”. I own my virtual real estate, there are no property taxes, and I do not need its driveway plowed in the winter.
Agriculture is big in Michigan
It has been said if you want a real thrill, jump out an airplane. But if you really want an adrenaline rush glued to the edge of your seat, buy a farm. In Michigan. In the winter.
Agriculture is one of the top three industries in Michigan, along with manufacturing (obviously, autos leads that) and tourism (which we all know is “Up in the U.P.”) Michigan grows a lot of hay, sugar beets, beans, corn and wheat, and is one of the nation’s largest producers of Christmas trees. Now that is happening business for a return on your land investment, as in oh, 8-20 years to grow a crop of trees that can be destroyed by one heat wave shipping them south after cutting. Michigan also grows a lot of hot house bushes and plants, which actually account for 14% of their agricultural output according to netstate.com. Well, somebody has to grow all that stuff that freezes in the winter, right?
Choosing agribusiness investment property can be challenging
Back to the winter farm purchase, though. A little geology is a good thing here. Michigan, like other states around the Great Lakes, was pretty much formed out of glacial moraines pushed up during the last ice age. Put that in every day language and you are talking dirt and rocks pushed up together. Rocks. Lots of rocks. To rockhounds Michigan is a paradise of agates, copper ores, and other pretties of every color and pattern. To a farmer they are a nightmare.
A white blanket of snow is a realtor’s BFF to pawn off rocky, swampy, or poor quality farm land.
Buying a farm or any raw ground in Michigan should only be done when the snow is off. Period. That kind of limits looking around to four or five months, less mud season, so make it three or four. Any good farmer knows that if you are going to plow and plant even alfalfa the rocks have to go because even one good one will break a tine off your cutter and you are down for repairs. Meanwhile it rains on your hay, ruining it. And rocks, while there are machines that do some good, usually have to be picked. By hand. You get the ugly picture.
The poor land, the low swampy mucky clay clogged stuff, well, you can buy that all day long. Selling it is another thing, if you can find a sucker that can fend off the mosquitoes. And doesn’t mind rocks.
So once you have found the perfect piece of nice dark loamy soil next comes the sticker shock. Good Michigan farm land runs $5,000 per acre, and it rarely sold except when lost. Farming in Michigan is suffering the same fate as elsewhere, in that family farms, many held for generations, can not compete with agri-conglomerates.
Agricultural property is notoriously difficult to get banks to extend mortgages on, especially if you are not a farmer, as the failure rate without experience is high. They are not keen on investors, either. Insurance can be a whole different issue. Many farm structures are older houses, barns, machine sheds, pole barns, that fit into a different insurability category, if at all. Also, many farm policies require the property to be occupied. Do you want to deal with a renter calling about a frozen sewer line at 2 a.m. when it is -30 below?
Michigan is an outdoor recreation bonanza
Recreational property in Michigan is usually scarcer than hens’ teeth. Michigan has three main interests for tourist business – the lake shores, the hunting areas in the north, and the UP. (Going for a weekend in Detroit can be more like going with Xminks into Call of Duty, so we are not going to call that a holiday stop.) The challenge with recreational areas in Michigan is many of them have been settled and are in the same family ownership, or belong to the state. Lake cabins, fishing resorts, boating operations, up state hunting preserves, usually are limited, have high insurance, taxes, and very seasonal revenue streams.
Yeah, I know, some of them rent snow machines. You ever tried to keep a snow machine up and running? I would rather be sitting on a warm beach somewhere with my laptop and a cold drink working on my tan and a new lead gen property. No 30 minutes to put on enough clothes to keep from freezing in very sub-zero weather, and I am making money. Repairing snow machines does not.
The really good recreational areas are pretty much tied up or belong to the State
Really nice resort type property such as in on the Upper Peninsula, which you can only get from the rest of Michigan by boat (or a very long drive the length of the state, across northern Ohio and Illinois then up the length of Wisconsin…who ever divided this state like this anyway?) isn’t for sale. It has been in private trusts or state ownership since time immortal. They do grow some apples and some gourmet food up on the UP, but it is limited, expensive, and mostly goes to hoity toity restaurants.
The other great place is Mackinaw Island. It is only accessible by boat or ferry, too. It is a beautiful place with a grand historical hotel, which is wicked expensive to stay at. And only open about 4 months a year. The whole island is sort of a wildlife sanctuary, so buying property there if it ever came available is super expensive and has many rules like HOA policies except much tougher. Tying up my money to even be able to enjoy it for 4 months a year let alone not make anything on it and having someone tell me how to enjoy it seems a little lame.
So is commercial property the way to go for real estate investment in Michigan?
Commercial properties in Michigan come with some challenge. First is condition of the buildings, many not maintained for over two decades due to the struggling Michigan economy. Next, what liens and issues may come with the property? A lot of properties in Michigan come with more than back taxes or repairs. Some come with fines and EPA issues.
Flint everyone knows is tragic and may never recover from the environmental issues it faces. Many Michigan cities have environmental challenges, as manufacturing and industry were pretty lackadaisical about chemicals, leftover industrial waste, toxic cleaning materials, and the like just being dumped onto the nearest land or into the nearest water. Sometimes it was just left right where it landed on commercial properties. This means ground water and ground, period, on many properties face expensive clean up, disposal fees, inspections, and health concerns.
Chemical clean up and pollution is a vacuum for your dollars, if you go there.
Third, what is the tax base on the property, and last, can I even find a buyer or renter for it once I purchase it? Rehabbing commercial buildings is often a moot thing to do, as many renters or new owners will want to build out according to their needs.
Retrofitting commercial buildings is costly
Often commercial investment properties will require old equipment being torn out and hauled, as much of it is has no resale value, is worn out, is out of date, or is just simply too expensive to move and/or retrofit. It has to be done, though, to make the place rentable or salable. Tearing out and hauling large factory equipment is expensive, often 6+ digits expensive. Add that to the costs of acquisition, clean up, taxes (often back taxes), and commissions to handle both purchase and sale, you have eaten up a chunk of any money you might make on a larger commercial building.
Smaller commercial properties are more doable, if the building you are thinking of investing in does not require extensive repairs and updates to meet code. Many small business and commercial real estate owners lost their properties during the recession in Michigan. This is especially true in large cities like Detroit. Detroit, while making a comeback, has major neighborhood issues with many that will never recover. Is that small strip plaza in an area where people are actually rehabbing homes and selling at a reasonable profit, or is it in an area that looks like a bombed out war zone?
Lots of due diligence is needed in any city in Michigan, period, when you are putting money into either commercial or residential real estate, to see if there is any chance of a return on your investment dollars.
Detroit is recovering….maybe
On the topic of commercial business in Michigan, it is worth note that General Motors, GM, is the largest employer in the state. They are based in Detroit. Detroit is one of those areas the real estate investment companies keeps telling you is a great place to buy property.
USAToday reported on Nov. 26, 2018 that GM was preparing to close plants in Michigan, Ohio, Maryland, and Canada. That included the Detroit Hamtramck plant. GM is laying off 15% of their salaried work force, and numbers of hourly workers facing reduction is still being challenged by the unions. Then they got hit with negative sanctions for having to close plants.
It does not sound like Detroit is a sound place to invest real estate dollars now or for some time to come.
I would rather have some control over where my money comes from, and goes.
When I build out a lead gen property, I know from experience that I will see a very strong return on my investment. I own the property, and I make the decisions. I get to choose who I rent the leads to every month.
Let me explain about the return. When I built my first lead gen site
I spent about six hours doing it. I got it rented right away, for $750 a month, direct deposit into my business account. I have a little bit invested in monthly fees to keep the phones lines up and the website active. I have rented that site for 4 years, and I have cleared, in pure profit, over $32,400 on that one site. And I hardly ever touched it once it was up. Can you say you never touch your rental property? I bet your $750 is going for the mortgage and not into your pocket as profit.
Real estate investment companies would like you to believe that buying rental property in Michigan is a strong, smart investment move. Areas like Detroit and Ann Arbor have real estate investors clubs popping up. Meetup has even jumped into the real estate investment parlor, with get-togethers matching up people with money and contacts from MREI as well as investment firms that specialize in Michigan real estate both residential and commercial.
Taxes in Michigan are a big problem for investing
There is another thing about real estate investing in Michigan. Across Michigan reported on patch.com, January 24, 2019, that a recent study by 24/7 WallStreet found that Michigan’s property tax rate is the highest in the nation. Above downtown New York City and Beverly Hills. Wow. Add that to 6% flat income tax, 6% state sales tax, and the fact that all pensions and retirement monies are taxable in Michigan and you have a heavy burden on people already praying their jobs do not go away.
I did a lot of investigating into both commercial and residential investment opportunities in Michigan when I started having real revenue and extra cash from my lead gen business. I kept hearing how good an opportunity it was with recovery happening. That was not what I found to be true. It just could not match my lead gen business.
After attending the University of Michigan and graduating to the $35K a year corporate gig, I knew early on I was not going to be happy punching the clock. It was drudgery and it was immediately obvious I would never make enough to have a life, let alone a lifestyle, like I wanted. So I started looking around.
I did a lot of research and reading, and got involved with several MLM’s and then drop shipping via Amazon. I was still working the 40+ hour job, too. I worked my backside off and made some money, but had zero life and was exhausted all the time. I made a little decent money drop shipping for Amazon, but it was killer to keep up with the time, tracking, and issues generated by such an enterprise. So I kept looking.
I knew in order to make a decent life for myself long term, I had to find something that provided residual income with the least effort to maintain. That meant whatever that business venture was, it had to be rock solid, streamline, and easy to learn, understand, and operate. I had a background in computers, so of course, I looked more toward online opportunities, as I simply could not deal with all the inventory and space many small businesses required, let alone the narrow profit margins and cost of acquisition, slow turn rates, taxes, and the like.
That was when I discovered the lead gen coaching program Dan has written and was working every day
It took a couple of years of looking, trying, and working myself half to death, trying to eek a decent profit margin out of the online models I was spending time and money on, when I ran into Dan and the lead generation coaching program he had put together. I regularly read entrepreneurial blog I followed., and there it was. Here was a guy like me, well, sort of, I had the college bills and he did not, but he was not much older than I was (I was 25) and he was making money hand over fist. He had a scalable business, with a very high return on investment.
And he had a life. That was really important to me after several years of 80-90 hour weeks. I needed a life. So I thought, what the heck, the call was free and no obligation, and I signed up for a phone conversation about his program. The same place I set up a call is right here https://www.bestrealestatedirectory.com/lead-gen/
I was impressed. Dan was a very straight shooter, obviously ran a very ethical business, and was positive and full of energy. Most important to me he was not trying to sell me somebody else’s stuff – his coaching program was his, he worked his business that he taught how to do every single day, had a family and was making serious money. He was not cutting corners to get, or keep, customers – his motto was always give more than you get. And he was able to invest in other streams of revenue to create a legacy for his wife and children. Impressive.
I really liked what I saw and heard. I got all my questions answered straight up. So I signed up, paid my tuition, did the homework and learned the program. I saw that even though I had a computer background, it was obvious that anyone with only a little work could learn, easily, even if they had never been around computers.
I had to hang on to the corporate job for 5 months to cover my bills. I resigned to go full time in my business at five months. And met my bills. And I never, ever, looked back.
My business investments average 80-90% return. Consistently. For four years.
Was it hard work? Yes, at times.
Was it scary? A little. Any business you own is a little scary at first.
Was there a learning curve? Yup. It is the internet, it changes constantly.
Will it tap out? No. No. and No. The world is going digital, period, to find what they need, when they need it, for the price they need it. Successful businesses are learning that, and it is wide open for people like me – us – to help them grow.
How many of you can say you walked away from your j-o-b to your own healthy business with residual income that paid all the bills plus some in five months? Not many.
Would you like to?
Here is the link https://www.bestrealestatedirectory.com/lead-gen/ for more information and to sign up for a no commitment, no cost call to learn about the training and opportunities it can provide for you.
You will be so glad you took that first step to freedom. I sure was.
Or you can go shovel snow in Michigan to fix that broken sewer pipe.
Choice is yours.