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Jordan and I delve into the fascinating world of Michigan’s vacation rental market. Together, we’ll explore the unique characteristics and factors that make this region a prime destination for both vacationers and rental property investors.
In this engaging conversation, we’ll discuss crucial aspects such as zoning regulations, the alluring charm of Michigan’s pristine beaches, and the affordability of properties in the area. We’ll also touch on the diverse attractions and activities that draw visitors to this beautiful state, and how these contribute to the overall appeal of the vacation rental market.
Whether you’re an experienced investor looking to expand your portfolio or a newcomer seeking to enter the world of vacation rentals, this episode offers valuable insights, tips, and local knowledge to help you navigate the Michigan market with confidence.
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This editable transcript was computer generated and might contain errors.
Tony Stancato: Welcome to the Michigan. Short-term rentals podcast, my name’s Tony Stancato here with my co-host. Jordan painter. What’s up Jordan? How’s it going?
Jordan Painter: What up, Tony. Man, life is good. Life is good.
Tony Stancato: Nice. So you are completed the 75 hard, you still making it happen on the workout side.
Jordan Painter: Got it done. Yeah I was kind of platoon at the end so I I added in swimming now again and I mean it’s only been like a week and a half two weeks and I’ve already started to see a difference that that level of cardio was swimming is just it’s different and getting ready for the 70 mile high man. I want I want to drag his few pounds along with me as I can, so trying to get the weight down before we we embark.
Tony Stancato: Yeah, I’m with you on that. I think. If I can lose 10 pounds in the next couple months I think it’ll make the the trek a little bit easier for sure.
Jordan Painter: Yeah, no doubt. No doubt.
Tony Stancato: Yes, so today we wanted to talk about what makes a good short-term rental market. You know, we’re operating in the Southwest Michigan market and we can touch on what why we’re excited about that market, what we like about it. And then also potentially talk about some of the, some of the downfalls in that particular market. But hopefully you’ll be able to use some of that information to analyze different areas across the state and potentially the country. So um, what are some of the reasons that we’re really bullish on the Southwest Michigan Market?
Jordan Painter: I’d say that big one in the low-hanging fruit, we’ll get into some of the reasons why people go there, but I’d say the, the big one is the proximity to major cities. The closer, you are to a major city, the more people with high incomes have to travel and if you can be close and offer something that they can’t get in the big city like a beach or you know, whatever those things are proximity to Chicago. In our case has been a huge factor, I think for the success of that market.
Tony Stancato: Yeah, we’re Call it 90 minutes to two hours from the third, biggest city in the United States and all up and down the southwest Michigan area is just small beach town after small beach town. I mean, I’m still discovering new beaches in the area and I mean, it’s just
Tony Stancato: Beautiful amazing area. I mean I still can’t believe how nice the water is. I mean, some of the pictures I look at just I mean, it feels like you’re in the Caribbean. Um, so yeah, definitely a great place to vacation and I’m sure there’s lots of Chicago families that that’s their their summer, you know, that’s their, you know they’ve been doing it since they’re kids go up South Haven or, you know, buffalo stuff like that. And you know, that’s just maybe one of those yearly trips that they, they have plans. I know for us, too. We get a lot of Chicago people, you know, like groups of 10. Just love to come hang out and spend the day at the beach and hang out at the property and have fun as well. So yeah, definitely proximity to a place, like Chicago has been huge.
Tony Stancato: And then two is, you know, like local. Amenities again, we just kind of talked about in this particular market. Some of the local attractions are I mean number one is the beaches and that’s you know gets super popular in the summer. And again if you log on right now and search for a property that would host 16 people you start looking at weekends. I mean I was looking the other day, there’s like two properties in, they’re not, they’re a little bit further out from the Lake Michigan area itself. So there’s just not a lot of inventory in the area. Um,
Tony Stancato: So local attractions is definitely a big thing that you’ll want to look for in an attraction. I guess doesn’t necessarily need to be just a fun thing. You know it could also be. I know we’ve talked about it before but there is a power plant in the area that you know once or twice a year they’re bringing in 500 contractors so that’s a huge increase in demand for housing for, you know, luckily during the the off season. So an attraction also could be About hospitals and and stuff like that. Where people, you know again in this instance of travel nurse is going to come to town literally over the last Week to 10 days. I’ve probably gotten seven.
Tony Stancato: People reach out to me about how soon or short stays just in this little area. So if you can validate that in a particular area, there are some of those, you know, obviously the bigger sit, the bigger, the city, the more opportunities for stuff like that.
Jordan Painter: Yeah. So another big one is, you’d mentioned some of the amenities but just shopping center’s and especially the door to door you know kind of the ones that had the the small beach towns have. It’s kind of interesting you know Tony mentioned going up and down Lake Michigan and seeing these beautiful beaches and beautiful beaches are definitely a draw but people want other things to do. So there’s tons of beach towns up and down the coast. So if you can be close to those,
Jordan Painter: The closer you can be to those the better because that’s where people are coming, you know? They’re coming to Southwest Michigan for a South Haven or a St. Joe, or maybe even a great haven, or whoever it is up and down that coast, they want to be close to those things. They want to be able to walk to them if possible. So, if you can be in those areas, that’s where people really want to be in the peak season. Or if you can, if, if those areas some of those areas now are very restrictive on short term rentals, if you can be close to those areas close enough to, for a short drive, you can have a pretty good leg up on the competition as well. So shopping centers, wineries is a big one, that’s another one. I think, especially for the offseason for us. You know people coming in this fall and winter even when they just want to get out of town and go, you know, do do a winery tour. That’s a really, really cool. One for people looking to get out of town.
Tony Stancato: Yeah, in another thing that would make a, that makes a great vacation market would be in inventory. I know, you know, being on the real estate side sometimes it can feel like your area doesn’t have a lot of inventory, but I know I’ve had the discussion with some other people. The I’m gonna throw it out there, Muskegon area, right? I feel like Muskegon is one of those areas where I can go pick up five properties today and turn them into short-term rentals, and that just means that anybody else can do that. And if you have a short-term rental in that area, I mean the competitions coming, it’s gonna get fierce. So, southwest Michigan, man. I mean, I don’t know there’s just how many properties come out on a daily basis. I mean, I swear, they’ll be like weeks where we see
Tony Stancato: A handful of properties come out and out of those handball. It’s like none of them really make sense as short-term rentals, right? So yeah, if you can find a place that’s just really lacking in inventory and just watch it like a hawk. Obviously, that makes it really challenging. Like we have people that want to buy a short-term rental in that area and it’s like Well it’s kind of a waiting game, you know? I mean there’s just there’s not a lot but I think there’s pros and cons of that in one of them is, you know, I feel like you get a little protection from the competition because people just can’t come in and, you know, buy five houses that once and all of a sudden be your competition, although in our area, I did see, I think I said the listing the other day man, somebody built like a compound of like
Tony Stancato: I’m not, I don’t know if they’re luxury, it’s kind of got a weird feel to it in my opinion but I mean, definitely more expensive homes, all on one law. I think they don’t probably Five or six five or six like eight hundred thousand dollar homes that are specifically for short-term rentals. So they probably got sick of waiting for the inventory to pop up and just said, Hey, you know, let’s let’s just build our own little ecosystem here. So,
Jordan Painter: Yeah, that’s definitely a good point though. As far as the, it’s a blood blessing and a curse, when there’s no inventory coming on the market to buy, that’s gonna limit the amount of competition. It, they can happen in a short term, for sure. So, another great one I think is, if you can find something that has a combination of maybe golf courses, and skiing hills, or snowshoe trails or ATV type trails. You know, hunting fishing. If you can find something that has has some kind of thing to do some kind of attraction for all seasons, some of those areas they might not necessarily be the highest income generators. But if you can find something that balances maybe not quite so crazy prices but also has a pretty good year-round draw between several of those different attractions that can be something that maybe you get a little bit more consistency throughout the year.
Tony Stancato: Yeah. No,…
Jordan Painter: So, that’s a good thing to look at.
Tony Stancato: and then, you know, the other thing you’re gonna want and again, I’d say southwest Michigan again, depending on where it’s at. I mean, it’s it’s very interesting as you go through the different towns in southwest Michigan, new Buffalo Union Pier, right very expensive homes in it,
Tony Stancato: Pretty much does not make sense, in my opinion, as a short-term rental. Because everything you’re buying has 600 grand, 700 grand, but a place like Stevensville sometimes in Southaven, Maybe we don’t own or operate. Any in Oklahoma price. Point is very affordable can be very affordable in those he areas even with the lack of inventory. So, I mean stevensville, I mean, plenty of houses, you know, we bought one at 180 or we’ve had clients by one at 185 under 300 and in the twos, right? So Definitely, with interest rates, the way that they are.
Tony Stancato: Finding a place that has affordable homes, right? Like Yeah, you can go to Orlando, Maybe. I don’t know what the prices are in Orlando, but very competitive. Seems like it’d be a little bit higher priced home there. So are you going to be able to make The same amount of rental revenue. In that area with a elevated home price. So find one that has affordable houses but can still get that elevated rate which is easier said than done.
Jordan Painter: It is easier, something done. But I would say just anecdotally between, if you look at a Orlando or Gatlinburg or any of these areas, these big touristy areas around the country, you’re probably going to pay Close to twice as much to get the same gross revenue as you will pay. If you do research and find some of these out you know these areas that are just outside of where where you might think people want to be you can you can pay a lot less money for very similar amount of revenue for sure. So another one, another big one is wedding venues won’t even use bringing a lot of people and they bring in people even with with off seasons and stuff like that. Big wedding venues will bring in people.
Jordan Painter: Brings in a large number of people, and you can consistently market to those people and maybe even set it up specifically for those type of events. That’s another one that could be a really good revenue producer. And it could be an area that that you, you don’t even think of when it comes to, where people want to go on vacation to necessarily. And a lot of times those areas have less inventory and less competition as far as other options for rentals as well.
Tony Stancato: Yeah. And I mean, I think you touched on the restrictions of the area, obviously, that’s going to be a big one for finding the right area. You want to find a place, that is very friendly to that. So when I know I mentioned New Buffalo for my understanding, the City of New Buffalo wants, nothing to do with vacation rentals. They don’t allow it and they don’t look at it in a positive light. So they’re not allowed there, but you just want to, you want to find a place. Stevensville seems to be pretty friendly towards it has made some interesting adjustments to their, you know, occupancy levels that are kind of favorable to hosts and stuff like that. So they seem to be very friendly in that regard. South Haven, you know. They have a
Tony Stancato: Of short-term rentals already there. I know there’s the talks about there’s been people going to the board and, you know, there’s been talks about cabinet and and doing stuff like that. So you know, you just always want to do a little bit of research in advance and even if they’re allowed now and kind of want to get a feel for what the, you know what the tone is in that area and if any changes are coming down the lines,
Jordan Painter: Yeah. Also, to that point looking and making sure that you understand what the rules are. There’s still a lot of areas that don’t have any vacation rental rules and there’s two ways that that could go for. You one way, is they grandfather and everyone else who’s already doing vacation rentals? The other one is they shut it down completely. And there was a there was a township in West Michigan. ah boy, it was I was somewhere around Holland West Olive area and I forget what township it was but they overnight Basically shut all them down. They gave they gave some notice to people that were doing it. But you’re talking about an area where there were certainly people that had a million plus dollars invested in the short-term rentals on Lake Michigan that
Tony Stancato: He?
Jordan Painter: Were shut down. They were not grandfathered in the the township previously. Did not have any rental rules on it and then they decided, you know, what, we’re gonna shut him down. And so, all of these people had to had to, to close overnight and You know, I don’t what whether it’s selling the places or, you know, keeping them and not running them, depending on what the situation was, you just really never know, each township. There’s not a there’s not a must do checklist to follow when they start implementing these rules and…
Tony Stancato: Really important thing.
Jordan Painter: some some are very reasonable about it and some of them are not
Tony Stancato: Yeah, and that’s where I mean, we always try to look at things with alternative options, right? Like I mean, we We were under contract on one. It was going to be in an HOA which was kind of the deciding factor. I mean, still awesome. House brand new build, you know, it’s probably Still could have made a couple hundred on you know right now s***.
Jordan Painter: If I got out voted on that one,…
Tony Stancato: I mean whatever is that whatever is out there is like still 800 grand so 600 would have been a steal at that at that point but
Jordan Painter: let the record show.
Tony Stancato: Yeah, yeah. So the only you know, yeah the the thing on those types of properties, you know, not that six, hundreds super high but some of these ones that people are buying at 800 million 1.5 right, there is no other option other than, you know,
Tony Stancato: Keeping it as a vacation home or trying to sell it but now all of a sudden, if you think about hey I’m in this area and let’s say they did just turn it off you know because there wasn’t restrictions What other options you have if you have debt on that if you’re you know I mean what’s what’s the debt on a million dollars? You’re not long-term running that thing and then all of a sudden You have everybody else in that area that has one point. You know, a million dollar house all coming on the market at the same time. And then half the buyers are probably investors. I want to do short term rentals and they’re not going to be able to, you know, they’re not gonna be interested in buying those properties. Right? So now I’m sudden, you’re high in home, seems like it comes down a little bit. So we always just like to
Tony Stancato: You know, doesn’t make sense as short-term rental awesome. Hopefully, we can still get it to make sense as a long-term rental just get a couple different options or even a midterm rental, right? You know, a lot of our places I’ll do well with midterm rentals as well. But you know, not many people want a seven bedroom house for a traveling nurse, you know? So yeah.
Jordan Painter: Okay, you got to be aware of that market and again to Tony’s point. The exit strategies is important and if an area doesn’t have those rules and they ban it, it’s not it’s really not just investors that that impacts, it’s people who inherited their family home and to pay the taxes on it, they rent the thing out. I have clients right now looking Up and down the lakeshore for places for their family but they also want to be able to rent it enough to help cover some of the costs. So it really does narrow the buyer pool substantially in those markets that end up, banning it. And that’s gonna affect resale value. That’s gonna affect the buyer pool. So you’ve got to be really careful the higher end. Property you go, the fewer options you have for exit strategy. So for sure, when you’re picking an area and identifying an area, Make sure you understand those risks in those exits.
Tony Stancato: For more talking.
Jordan Painter: Very well.
Tony Stancato: Yeah, I do think Lake Michigan. Now, there’s just so little inventory being on Lake Michigan.
Jordan Painter: Or.
Tony Stancato: If you actually buy a place on Lake Michigan, it seems like you will still be pretty well protected on the price on the study thing.
Jordan Painter: Yeah, I think so through certain extent. But with it,…
Tony Stancato: We pulled some numbers.
Jordan Painter: you shifting economy, and with the interest rates high and a lot of those things going on, you just have to be very careful that that you’ve got a good plan and in a clear exit strategy because those those type of houses can be affected and they’ll be the first ones to be affected if there’s some kind of a downturn. So
Tony Stancato: Yeah, all right. Well, I think that’s it until next time.
Related: How to Scale Short Term Rentals