Any opinions on buying rentals in Grand Rapids?

[Philip Beckwith]

Hello Grand Rapids investors. What is your feeling about buying single-family properties in Grand Rapids now? It seems pricey, but that doesn't mean it isn't worth investing.

Last summer it was pricey too, but we waited, found a couple of fixer-uppers and made it work just fine. I'm thinking with patience and being smart about things, there is still a chance for making a new in investment work. I'm wondering if people agree or disagree.

[Jon Smith]

I agree- be patient.  Anything on the market, especially for single-family homes, you are in competition with other investors and owner-occupants.  Owner-occupants can pay more since they are not looking for a "return on investment" per say.  Run your numbers and stick to them- note that maintenance costs are still high, so pay careful attention to your numbers.  I think it also has to do with your goals.  Some investors don't care about cash flow; they want a nice asset that, for the most part, pays for itself over time- and some are looking for immediate cash flow.  Immediate cash flow is tough right now when buying on the open market.  Take the emotion out of it, know your numbers, and stick to them!

[Jacopo Iasiello]

As you mentioned, patience is crucial in navigating a competitive market. Look for opportunities where you can add value through renovations or strategic improvements.

[Logan Laperriere]

Grand Rapids is a great market. As others have said, be patient. Finding cash flowing single families is difficult given the interest rates and competition with owner occupants. But that is only one way of making money on rental properties, you still have appreciation, depreciation, mortgage paydown, etc. 

 I am glad that you were able to find a couple of fixer uppers that is a great strategy. A lot of home buyers are turned off by properties in need of renovations. The city has been working on implementing lead swab testing for rental properties, that is something to consider when purchasing properties built prior to 1978. 

[James Likis]

@Philip Beckwith how did you find the deals that you moved on last year? MLS or off market? I'm currently scanning the MLS while also trying to connect with wholesalers for some off market opportunities.

[Philip Beckwith]

Quote from @James Likis:

@Philip Beckwith how did you find the deals that you moved on last year? MLS or off market? I'm currently scanning the MLS while also trying to connect with wholesalers for some off market opportunities.

Currently just mls. We probably should explore wholesalers. In my mind those usually take more work to get into a rentable condition, but maybe I'm totally wrong on that.

[James Likis]

@Philip Beckwith that seems like a fair assumption on average. That lower acquisition cost can, though, payoff over time with the goal being buy and hold as rentals. 

[Randy Charboneau]

Quote from @Philip Beckwith:

Quote from @James Likis:

@Philip Beckwith how did you find the deals that you moved on last year? MLS or off market? I'm currently scanning the MLS while also trying to connect with wholesalers for some off market opportunities.

Currently just mls. We probably should explore wholesalers. In my mind those usually take more work to get into a rentable condition, but maybe I'm totally wrong on that.

The Grand Rapids wholesale market is a wild wild west when it comes to property condition and deals.  I'm seeing conditions vary from turnkey/rented to almost tear down.  The spread/margins can be great to nothing.   It really depends.   It seems like everyone wants to get into the wholesale market since it's the new "get rich quick with no money" racket and the better deals seem to be landing in the more experienced outfits hands.

Most of my clients have been looking in the Kalamazoo/Battle Creek and Muskegon markets due to the lower price points and better rents/vs/sale price ratios.    I think for Grand Rapids you want to target a property that simply isn't suited for an owner occupant who will need a loan in its condition.  That gets all of those kinds of buyers out of the way and you're simply dealing with other investor competition on it.  This may mean picking up something that needs work or something that has a unique issue that turns homeowners away that you might need to fix at some point, but it's possible to still make money in GR.