If you want to continue to diversify your investments, then now is the time to buy investment property in Michigan. You can take advantage of the current market and generate even more income—as well as tax benefits.
The trick to expanding your investment properties and portfolio is in buying. If you're not careful about picking properties, no property manager in Michigan can save you and you'll being sinking money into marketing and general contractors trying to fix the asset that turned into a liability.
Our experience as property managers in Michigan working with a variety of landlords and property funds has given us a great insight into purchasing and managing properties.
1. Buying Investment Property at the Right Price
Working and negotiation on a bargain now will bring you the best price later. A lot of real estate investors - especially new ones - get caught up in the amenities and attractive features of a home, or the location, with the idea that they can rent it for a great price and it will attract all kinds of buyers.
Unfortunately, if you overspend on even a nice home it will be extremely difficult to recoup your costs. What's worse is that if you overpay and don't try to negotiation a better deal, your monthly costs will go up which could leave less income for important services like a property manager in Michigan or accountant.
Before buying a home, take your personal feelings and emotion out of it. Know the rental rates in the area, and factor that into what your monthly costs would be after paying back a Michigan mortgage lender or providing interest to a private lender. You also need to consider others costs including insurance, tax, utilities, etc.
2. Find the Right Neighborhood for Investment Property
For other homeowners, rental properties aren't always favored, as rentals don't always make good neighbors. You want to find a community where your rental property is far more likely to be accepted by the locals. This doesn't necessarily mean you have to find a "rental community", but it pays to know the general disposition of the locals.
If new renters are made to feel unwelcome, they're far less likely to stick around and renew their lease. Remember that the most expensive side of town does not equate to the most comfortable neighborhoods, and rentals in bad areas can do just as poorly.
It takes real research and time to find the right neighborhood in Michigan for an investment property. Of course, when you partner with a property manager in Michigan, you gain insight into the neighborhoods you're interested in.
3. Know the Local Regulations on Rentals
You need to understand the local regulations on rentals: rental properties are treated more like a business than a residence. Permitted dimensions and layouts might be fine for a residential but they may not be accurate or allowed for rentals.
For example: a listing of a home for sale from a Wayne County real estate agent might say 4 bedrooms—but if that same home were a rental, it might only be a 2 bedroom based on permitted occupancy per square foot.
4. Consider the Maintenance—and Keep It Simple
You may love the idea of investing in an old Victorian you've had your eye on, but even working with a Michigan property manager can make the maintenance a pain. More elegant and dated construction requires unique maintenance.
A slate roof, steep roofing or special leaded glass can look attractive but it will be extremely costly to maintain or improve. Standard materials from Lowe's just won't apply—and contractors that have to make special accommodations to work on your property could charge you more.
When you're looking to buy an investment property, keep maintenance as well as renovation and rehab, location and the people around you in mind. These all affect the profit you can make from your investment property. Also consider ease of access, HVAC, plumbing and electrical, as regular extra work can wind up costing you a higher monthly rate with a Michigan property management company.