Are you interested in becoming a real estate investor but not sure where to start from? How about buying a vacation home? A vacation home might be the easiest way to become a real estate investor and enter the exciting world of real estate investing. When you buy a vacation home, first you provide yourself and your family with a free homey accommodation for your annual holidays. Second, you get the opportunity to rent out your vacation home on Airbnb for the time of the year when you are not using it (which would indeed be most of the time). To make things even better, you can benefit from tax deductions.
But how about the location? For your vacation home, you need a location where you would enjoy spending your holidays and where Airbnb guests would like to stay. Then, Michigan is definitely a great location. Michigan is one of the top 5 most popular US states for tourism in addition to being an important economic center. All that is left then before you are ready to buy a vacation home is to know the best places to buy a vacation home in Michigan. Let’s explore these top cities together.
What Makes for the Best Places to Buy a Vacation Home in Michigan?
First, we need to make it clear what the “best places to buy a vacation home in Michigan” means for us. For real estate investors the best place for any sort of investment property is the location which will yield the highest return on investment. There are many ways to measure return on investment in real estate investing such as rental income, cash flow, cash on cash return, and cap rate. Most real estate experts agree that cash on cash return is the best metric of the return on investment for a rental property, and that’s why we will use cash on cash return to rank the best places to buy a vacation home in Michigan. To be precise, we will use Airbnb cash on cash return because the Airbnb rental strategy would allow real estate investors to rent out their vacation home for the time of the year when they don’t use it for their own purposes.
The data which we will use to determine the best places to buy a vacation home in Michigan comes from Mashvisor’s investment property calculator which uses traditional and predictive real estate analytics to provide estimates of all important real estate metrics for both traditional rentals and Airbnb rentals. Mashvisor’s investment property calculator eliminates the need to conduct real estate market analysis to get real estate comps as well as investment property analysis to choose the best Airbnb rentals.
Is Airbnb Legal in Michigan?
Since we are talking about Michigan Airbnb rentals, the first thing which all real estate investors would want to know is the laws governing the Airbnb rental strategy in the State of Michigan. As a real estate investor, you will be glad to know that things are looking good in Michigan when it comes to Airbnb rentals. Recently two separate bills were introduced in the State House and the State Senate to prohibit local governments from enacting zoning ordinances which ban or restrict short-term rentals such as Airbnb rentals. While these bills are still to be discussed and voted on, they are a clear indication of the willingness of local authorities to facilitate the Airbnb rentals business to support the local economy. So, after you make your choice from the best places to buy a vacation home in Michigan, make sure to keep an eye on further developments in the state legislation governing Airbnb rentals. Positive changes are likely to happen soon.
What Are the Best Places to Buy a Vacation Home in Michigan?
Now it’s time to have a look at the cities which offer the highest Airbnb cash on cash return in the State of Michigan according to data from Mashvisor’s investment property calculator because these are the best places to buy a vacation home in Michigan.
(Just a note before we start: Keep in mind that the cash on cash return and the cap rate – for both traditional rentals and Airbnb rentals – computed by Mashvisor’s investment property calculator are the same as this real estate investing tool assumes all-cash investment property purchases.)
1. West Branch
- Median Property Price: $140,000
- Airbnb Rental Income: $3,740
- Airbnb Cash on Cash Return: 24.5%
- Airbnb Cap Rate: 24.5%
- Traditional Rental Income: –
- Traditional Cash on Cash Return: –
- Traditional Cap Rate: –
All real estate investors would be interested in knowing that West Branch tops the list of the best places to buy a vacation home in Michigan. The reason? The combination of very affordable median property price and really high Airbnb rental income of close to $3,740. This brings the Airbnb cash on cash return to the unbelievable level of 24.5%.
Remember how real estate experts say that a cash on cash return rate of 8-12% is good? Actually even such a rate is rarely realistic, so real estate investors should aim for investment properties with anything about 4-5%. But 24.5%? That’s amazing by all means. So, if you are thinking about starting out with Airbnb rentals, consider West Branch, Michigan very seriously.
Maybe you have never heard of West Branch? This would be no surprise having in mind its population size of just a bit over 2,000 inhabitants. However, the nickname “City with a Smile” would make anyone want to spend his/her holidays there, which makes it a truly ideal location for a vacation home, whether for your own use or to rent out on Airbnb. Some of the many attractions include a Victorian downtown shopping district, the beautiful Iron’s Park, and the new Downtown Victorian Park.
2. Three Oaks
- Median Property Price: $175,000
- Airbnb Rental Income: $4,460
- Airbnb Cash on Cash Return: 22.8%
- Airbnb Cap Rate: 22.8%
- Traditional Rental Income: $1,360
- Traditional Cash on Cash Return: 4.7%
- Traditional Cap Rate: 4.7%
The second among the best places to buy a vacation home in Michigan is Three Oaks, according to data from Mashvisor’s investment property calculator. Although the median property price is a bit higher than in West Branch (but still very affordable), the Airbnb rental income here is great. Once again, this combination leads to an incredible Airbnb cash on cash return rate of 22.8%, much more than what real estate investors in top housing markets can ever dream of.
Actually Three Oaks is a village with a population of about 1,600 inhabitants. David Grosse, the Village President, describes Three Oaks as made up of “diverse and charming housing stock” with a “parks system which provides a myriad of options for activities.” The village is “full of terrific restaurants, shops, galleries, theaters and a distillery”, while retaining its “rural character,” ideal for “active and passive recreation.” Don’t you already feel like spending your annual holidays there? And don’t you think many other people feel the same way? Do yourself a favor as a real estate investor and explore further the option of buying a vacation home in Three Oaks.
3. Benton Harbor
- Median Property Price: $127,000
- Airbnb Rental Income: $3,220
- Airbnb Cash on Cash Return: 20.1%
- Airbnb Cap Rate: 20.1%
- Traditional Rental Income: $1,160
- Traditional Cash on Cash Return: 4.7%
- Traditional Cap Rate: 4.7%
Mashvisor’s investment property calculator ranks Benton Harbor as #3 among the best places to buy a vacation home in Michigan, and “affordable” seems to be the buzz word in this ranking. Real estate investors here will experience a low median property price accompanied by high Airbnb rental income, which we know leads to excellent Airbnb cash on cash return. Eventually all real estate investors want high return on investment for their rental properties, and that’s exactly what they will get with Airbnb rentals in Benton Harbor.
Benton Harbor is yet another place full of attractions including beaches, a nature center, a gold club, vineyard, and a brewery which makes it an ideal location to buy and own a vacation home. In addition to having a top place for your own annual holidays, you are also guaranteed a high return on investment as a real estate investor with Airbnb rentals here.
4. Interlochen
- Median Property Price: $190,000
- Airbnb Rental Income: $3,920
- Airbnb Cash on Cash Return: 18.5%
- Airbnb Cap Rate: 18.5%
- Traditional Rental Income: –
- Traditional Cash on Cash Return: –
- Traditional Cap Rate: –
Interlochen comes as #4 among the best places to buy a vacation home in Michigan. The median property price here is still under $200,000, so it is affordable for both new and experienced real estate investors. The return on investment for Airbnb rentals is amazing with Airbnb cash on cash return of 18.5%.
Interlochen hosts the world famous Interlochen Center for the Arts, which attracts visitors from the US and abroad. The summer music festival is an important event which Airbnb rentals owners should mark on their calendar. Moreover, Interlochen State Park is one of the last places with virgin pines. All these factors add up to a top location for real estate investing.
5. Bellaire
- Median Property Price: $152,000
- Airbnb Rental Income: $3,220
- Airbnb Cash on Cash Return: 17.4%
- Airbnb Cap Rate: 17.4%
- Traditional Rental Income: –
- Traditional Cash on Cash Return: –
- Traditional Cap Rate: –
When you look for the best places to buy a vacation home in Michigan, you should definitely consider Bellaire. Airbnb cash on cash return of 17.4% is something that no real estate investor should just walk by. Monthly Airbnb rental income of $3,220 is great in all cases, but even more so when the median property price is about $150,000.
Bellaire is yet another village in the State of Michigan with a population of just above 1,000 inhabitants. However, it features a scenic main street, which is one of the factors that make it a popular tourist destination. Just what a real estate investor interested in Airbnb rentals needs!
6. Boyne Falls
- Median Property Price: $150,000
- Airbnb Rental Income: $2,690
- Airbnb Cash on Cash Return: 16.3%
- Airbnb Cap Rate: 16.3%
- Traditional Rental Income: –
- Traditional Cash on Cash Return: –
- Traditional Cap Rate: –
What about another one of the best places to buy a vacation home in Michigan? Boyne Falls is one more place which offers high return on investment for Airbnb rentals in the form of Airbnb cash on cash return of 16.3%
You thought Bellaire was small? Wait a second then. Boyne Falls has a population of just below 300 inhabitants. But it is right next to Michigan’s largest waterpark as well as a ski and golf resort. The community also hosts the Polish Festival on the first full weekend of August every year, so that’s something Airbnb rentals owners should mark in their calendars.
7. Niles
- Median Property Price: $170,000
- Airbnb Rental Income: $3,170
- Airbnb Cash on Cash Return: 15.2%
- Airbnb Cap Rate: 15.2%
- Traditional Rental Income: $850
- Traditional Cash on Cash Return: 1.2%
- Traditional Cap Rate: 1.2%
The next location in Mashvisor’s investment property calculator’s ranking of the best places to buy a vacation home in Michigan is Niles, which also offers a double-digit Airbnb cash on cash return. The median property price is affordable, while the return on investment is high, so what more can a real estate investor interested in Airbnb rentals ask for?
The City of Niles with a population of over 11,000 inhabitants (sounds big after all the previous best places to buy a vacation home in Michigan, right?) offers numerous attractions. Actually, Niles claims to offer “the feel of a small town with access to all things that a big city has without the big city rush.” Now that’s some great place for real estate investing when considering a vacation home.
8. Suttons Bay
- Median Property Price: $680,000
- Airbnb Rental Income: $6,600
- Airbnb Cash on Cash Return: 14.6%
- Airbnb Cap Rate: 14.6%
- Traditional Rental Income: –
- Traditional Cash on Cash Return: –
- Traditional Cap Rate: –
The last of the best places to buy a vacation home in Michigan which we will talk about is Suttons Bay. Actually, that’s the last location which offers a double-digit Airbnb cash on cash return according to data from Mashvisor’s investment property calculator. The median property price is high, especially for new real estate investors, but the expected Airbnb rental income is also very high. And the return of investment in the form of 14.6% Airbnb cash on cash return is definitely high.
Suttons Bay is a village in the State of Michigan with a population of just above 600 inhabitants which offers a historic shopping district, nature ride trails, and wine country tours. All in all: a perfect place to buy a vacation home.
The State of Michigan is definitely a top housing market at the moment. However, when we talk about the best places to buy a vacation home in Michigan, we did not even mention the typical top housing markets there such as Detroit, Grand Rapids, Sterling Heights, Ann Arbor, Dearborn, and Livonia. But after all, these are not the types of places where you would like to spend your holidays, right?
All real estate investors who decide to explore further the real estate investment options in Michigan should make use of Mashvisor’s investment property calculator and property search engine to find the most profitable investment properties in the best places to buy a vacation home in Michigan listed above.