Grand Rapids Market Questions (upkeep, vacancy, etc)

[Daniel D.]

Hello my name is Dan. I’m current living in AZ but I grew up in East Lansing.

I’m looking to start in the GR investment property market.

The first thing I’ve noticed was how old these houses are. This is much different than Arizona. You don’t see much older than the 80’s-90’s here. What would you consider a safe annual repair percentage to hold onto?

Second, the rental laws are different. I decided against East Lansing because their rental and zoning laws are strict and sometimes impossible to get your house approved to rent. How is this process in GR?

The numbers in GR seem almost too good to be true. For example, I saw a $525,000 quad plex that would immediately generate $1,600 a mo above the mortgage at only 10% down. Is there a catch? Who is the main renter market, students or professionals?

I do plan to visit next month and do some due diligence on different areas. I just thought I’d ask here.

[Sean Sloop]

Hey Daniel, 

From what I hear East Lansing is extreme on the zoning and such. It will not be so difficult in Grand Rapids (or even Lansing if you consider there). 

To @Charles Kao point, you will want to make sure you budget in management since you will be out of state. I would agree with his point of finding a local agent that invests to help you.

As far as age of the house, I wouldn't be too concerned. Assuming you get inspections and there are no red flags in the structure or foundation, plumbing, etc then I wouldnt worry too much. I believe the quad plex you looked at was down the road from me in Heritage Hill, these are all 100 year old historic homes. You will see 'younger' homes as you move away from the downtown area. You may want to tailor your repair reserve to the condition of the house, if it was recently renovated, then maybe 5-10k is enough. If you know you will need to do a larger rehab in the near future, then increase accordingly.

Grand Rapids is an excellent rental market because there is such a strong economy. Between a thriving healthcare industry, several colleges and universities, several large corporations across multiple industries, there is a great tenant base across the whole spectrum. 

Happy to chat in the meantime or meetup if you come in to town!