It’s hard to go a week without someone telling you that rental property is the key to an unburdened future. The second your algorithm catches wind that you’re curious, your feed fills up with gurus who own 30 doors and drive a Bentley. Buy their program and you can too.
I’m not here to talk you out of it. Owning a rental can be a beautiful thing. But I talk to a lot of people who haven’t thought through the work and the money it takes to get to the “passive” part. So before you start writing offers, here’s how I’d think about it up here.
Northern Michigan is a well-combed market
I don’t want to say investing here is impossible, but our market is very well combed over. Finding a home you can buy below market value, fix up, and get a real return on is hard.
In my experience, the deal usually isn’t in the purchase price. It’s in how inexpensively you can rehab the property. You’ll see plenty of homes get flipped around Traverse City. What you don’t see is that the new owner often has 25 years of construction experience and a phone full of tradespeople.
Be honest about where you are
- Is your own living situation stable? Some gurus will tell you to crash on a friend’s couch or live in a van so you can rent out your house. Long term, that can leave you exhausted and short on friends.
- Do you have cash reserves? Between fixing up, photos, and screening tenants, you’ll carry the mortgage and utilities for months with no rent coming in. When something breaks, it’s on you. The roof you and the inspector thought was fine? It’s not.
- Do you have a team? Every successful landlord I know either has contractors at the ready or the knowledge of one. Nobody is born with those connections. You build them, so start early.
Long-term vs. short-term rentals
Approach long-term rentals with a landlord’s mindset. I joke with clients about the “landlord special,” the meme where everything gets slapped with paint and called renovated. Don’t do that exactly, but take a little inspiration from it. If you can replace flooring, paint, update fixtures, and turn an unlivable place into a safe home for someone, do it. Long-term rentals are generally fine everywhere, as long as the HOA (if there is one) isn’t too restrictive.
Short-term rentals are a moving target. Every township has its own rules, and they change often. We had a huge surge in STRs during the COVID boom, and a lot of townships clamped down hard. I can’t name one STR-friendly township without driving about 45 minutes from Traverse City. Before you buy, have a real conversation with the township so you know, without a doubt, that you can short-term rent that property.
Run the worst-case numbers
Cap rate, ROI, and the rest of the math will ultimately be up to you. I can share the calculators serious investors use, and I’ll give you my scope of work on the house (I know houses well). The key is thinking about the worst case. Summer occupancy is easy to figure. What about the dark heart of winter?
Have an exit strategy too. If things go sideways, can you pivot to a long-term rental? Could you sell and recoup your costs? Use your head, not your heart, and you’ll be fine.
It’s not all bad
If the property is bought right, you have the resources, and you land good tenants, owning a rental is genuinely rewarding. You’re either providing stable housing for a local family or letting visitors experience the place we love. Up here, the need for good housing is real, and good landlords matter.
It’s my job to cheer you on when a property is right, and to tell you when to walk away.
Thinking about an investment property? My Buyer’s Guide has a full section on investing in Northern Michigan, or we can just talk it through.