A house with the possibility of an income stream will clearly sell for more than one without.
Jessica Lee and her husband, whom she asked not to identify, bought a New Buffalo home for about $300,000 in 2020 and moved full-time from Chicago. Lee said her real estate agent said the house would go for $100,000 more if it had a short-term rental permit.Crain’s Chicago Business
There’s big trouble in wind-swept, erosion doomed New Buffalo. The market built on the backs of short term renters is facing an identity crisis. Will they remain a market for renters, or attempt to transition into a more mature market, one that caters to vacation home owners. The new mayor, an intelligent fellow who calls himself John Humphrey, doesn’t like short term rentals. He doesn’t like them one bit. The reason he doesn’t like them isn’t even discussed in the recent Crain’s article, and I assume that’s because everyone knows how terrible short term rentals are for any vacation home community. Within home values up more than 50% in this second-tier vacation home destination, many of these owners are worried about the impact of a rental ban on their property values.
But back to that snippet up there, the one from the article. If a house is worth 33% more because it can be used as a short term rental, then what does that tell you about the market? To me, as an uninterested bystander, it tells me the market is built for renters, not owners. If your market exists to serve weekend renters, is that a market you want to join as an owner? If a hotel had 99 rented rooms, would you want to buy the 100th unit to make it your home?
There are other danger signs for New Buffalo and the other communities in that shadow of the Cook Nuclear Plant, as these folks in Michigan apparently have some sort of phrase for Illinois folks that now means I have to write an insensitive curse word in this blog. Such an awful thing to say, Michiganders.
…which they call Fips,” Murray said. Fips is a longtime Michiganders’ reference to “fucking Illinois people.”Crain’s Chicago Business
This current kerfuffle in Michigan proves once again that you are best served by hitching your financial investment to a market built for owners, not one built for renters. Beyond that, you’re best served joining a vacation home community that is able to use a lake, not just look at one. Michigan, built for lake-watching renters. Lake Geneva, built for lake-using owners. If you know someone contemplating a Michigan vacation home, please reach out to them before it’s too late. Friends don’t let friends make this sort of Michstake.