How To Flip Houses In Michigan: Step By Step (2024)

The Michigan real estate market is a great place to invest your money for long-term wealth creation. While financial advisors may suggest traditional investment options like stocks, bonds, and gold, real estate investment - and specifically fix and flip investing - is a smarter choice.

According to ATTOM Data Solutions' Q3 2022 U.S. Home Flipping Report, house flippers across the country continue to profit from flipping houses despite the challenging economic environment. Michigan is no exception to this trend.

The population has steadily grown over the past ten years, adding over 10,000 people each year since 2010. However, there are simply not enough housing units to compensate for this population growth.

In Michigan, the average home value has appreciated by 3.5% over the past year, according to the Zillow Home Values Index. The average home for sale in Michigan is currently priced at $223,793, a 52% increase from the average of $142,000 in 2018. Yet, despite this increase, Michigan’s average home value is still less than the national average, making room for additional appreciation.

If you're looking to invest in real estate in Michigan, keep reading to learn more about how to flip houses in Michigan.

• What Is Flipping Houses?
• Michigan House Flipping Statistics
• How To Flip Houses In Michigan (7 Steps)
• How To Find Houses To Flip In Michigan
• Do You Need A License To Flip Houses In Michigan?
• How Much Do House Flippers Make In Michigan?
• How To Flip A House In Michigan With No Money?
• Best Cities To Flip Houses In Michigan
• Final Thoughts On Flipping Homes In Michigan

*Before we begin our guide, we also invite you to view our video on How To FLIP A HOUSE For Beginners (Step-by-Step). Host and CEO of Real Estate Skills, Alex Martinez, & Stan Gendlin share how to flip a house in Michigan as a beginner! 

Together, Alex & Stan have completed over 1,000+ house flips. What you learn in this video will give you the confidence and guidance to successfully complete your fix-and-flip project!

What Is Flipping Houses?

House flipping is an investment strategy whereby an investor buys a property with the intention of renovating it and selling it quickly for a profit. Usually, these fix-and-flip investors buy distressed assets selling for below-market values.

Over the years, it has become increasingly popular for real estate investors, in tandem with their other investment strategies, to fix and flip properties across the United States. Michigan is no exception.

Michigan House Flipping Statistics

How To Flip Houses In Michigan (7 Steps)

Learning how to flip houses in Michigan should not be intimidating. If you want to learn how to flip houses in Michigan, consider the following step-by-step guide.

1. Find A House-Flipping Mentor
2. Research The Michigan Housing Market
3. Find & Analyze Distressed Properties In Michigan
4. Raise Capital To Fund The Deal
5. Close On The House
6. Renovate The Property
7. Resell The House

1. Find A House Flipping Mentor

Flipping houses can be a complex process. As an investor, you’ll need to navigate the buying process, ensure you are collecting and analyzing the right market data, overseeing a renovation, and figuring out the right exit strategy. All along the way you could face a number of roadblocks and costly setbacks. One way to avoid that is by finding an experienced mentor.

Mentors can steer you to the right markets, guide you through the home’s rehab, and connect you with like-minded realtors, lawyers, and lenders to help fund your deal. Even if you inevitably have to pay for mentorship or split future profits, it’s better than losing your shirt on a deal.

We know navigating the intricate world of house flipping can seem overwhelming. From understanding the purchasing process, collecting and analyzing pertinent market data, and managing renovations, to devising an effective exit strategy – it's a journey fraught with potential obstacles and expensive setbacks. This is where the expertise of Real Estate Skills can be your game-changer.

At Real Estate Skills, our seasoned professionals act as your mentors, guiding you every step of the way. Our experts help identify promising markets, navigate the nuances of property renovation, and foster connections with a network of real estate professionals to support your venture.

Ready to start house flipping in Michigan? Join Alex Martinez at his FREE training to learn how to get started with house flipping and wholesaling!

2. Research The Michigan Housing Market

If you're considering investing in the Michigan real estate market, it's important to educate yourself on the current trends, licensing requirements, property taxes, and desirable neighborhoods in the area.

One great resource to start with is the various educational content available on local realtor association websites. Here are some examples of realtor associations in major cities:

• Michigan Association of Realtors
• Greater Metropolitan Association of Realtors
• Ann Arbor Area Board of Realtors
• Grand Rapids Association of Realtors

By browsing these websites, you can gain valuable insights into the local real estate market and connect with experienced professionals who can guide you through the buying and selling process. Additionally, you may find information on licensing requirements and regulations specific to Michigan that can help you make informed investment decisions.

Next, you’ll want to compile market data, determine economic trends, and get an idea of the median home price within your desired sub-market. Consider the following resources:

• Zillow’s Housing Data Research: Zillow provides a simple-to-understand breakdown of the housing market. The data offers historical insight into home values, forecasts, rental indices, inventory, list and sales prices, and even price cuts.
• Realtor.com's Michigan Real Estate Market: This Housing Market page provides investors with listed real estate in Michigan by county, city, and ZIP code.

3. Find And Analyze Distressed Properties In Michigan

The most important component of house flipping is knowing how to crunch the numbers to ensure you’ve found a property that has true profit potential.

In order to ensure you’ve found the right property, you’ll need to take the following three steps:

• Calculate the After Repair Value (ARV)
• Estimate rehab costs
• Determine the MAO

Calculate the ARV

The after-repair value (ARV) refers to the estimated value that your property could fetch after you've completed the necessary repairs and upgrades. This value will directly impact your profit margin and is largely connected to the value of neighboring prices of similar configurations and designs.

Seek guidance from local real estate professionals, such as agents, appraisers, contractors, bankers, and attorneys to help you estimate your property’s potential value. These experts can provide valuable insights into the local market and can help fine-tune what value you should expect to achieve on a sale.

Read Also: How To Choose The Best General Contractor?

Estimate Rehab Costs

Properly estimating rehab costs is essential to ensuring a successful investment. Carefully assess which renovations you think will add the most value to your property and then accurately estimate the cost of those renovations. It’s important to be strategic when analyzing your rehab costs. If you can manage to be cost-effective on the renovation without detracting from your property’s ARV, you could make a heck of a lot of money.

Check out websites like HomeAdvisor and Rehab Valuator. They have construction calculators and guides that could be super helpful to use while you budget your project.

Determine The MAO

The MAO stands for the maximum allowable offer and it’s a formula many fix-and-flip investors use to calculate what price they should pay for a distressed property. This formula ensures the investor does not buy a property for a price that is not sufficiently covered by the ARV.

The fix-and-flip business has many moving variables. By abiding by the MAO formula you’ll give yourself a large enough margin of safety to ensure you make money even if things go awry.

Here is the formula:

ARV - Fixed Cost - Rehab Costs - Desired Profit = Maximum Allowable Offer (MAO)

What Is The 70% Rule In House Flipping?

The 70% Rule is simply an extension of the MAO formula. When calculated correctly, it ensures the investor makes at least a 30% gross profit on the flip. Here is what the altered equation looks like:

(ARV x 70%) - Renovation Cost = Maximum Allowable Offer (MAO)

Once you've grasped the basic principles and tactics of flipping houses in Michigan, it's time to start actively seeking out and analyzing potential deals. To thrive in this field, you'll need to maintain a continuous lookout for distressed properties in desirable areas. Some promising up-and-coming communities worth exploring include Detroit, Grand Rapids, and Lansing.

4. Raise Capital To Fund The Deal

One of the biggest challenges for first-time house flippers is financing the deal. You'll need to find the money to purchase the property and cover the cost of renovations. Here are some common ways to raise capital for your house-flipping venture in Michigan:

• Hard money loans: These flip loans are typically issued by private lenders who are willing to take on more risk than traditional lenders. These loans are often used by house flippers because they can be approved quickly and don't require perfect credit. Hard money lenders underwrite transactions utilizing the ARV calculation instead of the as-is value. This added leverage is a major reason why it is one of the most popular ways for investors to raise capital.
• Private money loans: Private money loans are similar to hard money loans but come from individuals instead of lending institutions. Your mentor could be a great source of this type of loan. Or, if you know anyone with a lump sum of cash to invest, you should consider bringing them your deal.
• Bank financing: If you have good credit, a solid business plan, and aren’t in a huge rush to close, you may be able to secure a traditional bank loan to finance your purchase. However, bank financing is usually not a popular option amongst flippers because their leverage is inferior to that of private and hard money loans.
• Seller financing: Some property owners may be willing to finance your purchase of their property. This can be a win-win situation for both parties if the terms of the loan are favorable and the seller feels comfortable with your business plan.
• Joint venture partnerships: These are pooled investments in the form of equity, rather than debt. Unlike the other options listed above, with a JV partnership, you won’t have to pay an interest rate. However, since it’s structured as equity, you’ll need to split the profits with your partners.

Read Also: What Is Seller Financing? The (ULTIMATE) Guide

5. Close On The House

After finding a deal and securing financing, it’s time to close on the house.  Michigan is not an attorney state so you’ll only need to facilitate the closing with the title company as the escrow agent. The closing process will be the same as any standard home purchase, but it's essential to understand the local regulations and customs in Michigan. 

You will need to sign a purchase contract and conduct your due diligence. This includes a home inspection and an appraisal or broker opinion of value if required by your lender. Finally, you will proceed with the sale and prepare for closing.

6. Renovate The Property

When renovating the property, your goal should be to maximize profit while minimizing downside risk. The best way to do this is by researching the area to determine which renovations will recoup your cost the quickest.

It’s best to focus on renovations with the highest Return on Investment (ROI). Remember, flipping houses is a game of precision and speed. It’s essential you have your materials, workers, and permits in order as soon as you close on your house so you can hit the ground running.

Consider the following list of high ROI capital expenditures for the East North Central region of the United States compiled by Remodeling Magazine:

• Garage Door Replacement: It costs about $4,046 to replace a garage door, but investors can expect to recoup about 93.9% of the initial investment when the home sells.
• Manufactured Stone Veneer: It costs about $11,008 to install manufactured stone veneer, but investors can expect to recoup about 90.1% of the initial investment when the home sells.
• Siding Replacement: It costs about $19,008 to replace the home's siding, but investors can expect to recoup about 68.9% of the initial investment when the home sells.

7. Resell The House

Once you’ve completed your renovation, it’s time to resell the house.

Most investors opt to sell their homes to owner-occupied home buyers rather than income-seeking rental property investors. However, both options are feasible exit strategies.

If you opt to sell to a home buyer, you’ll want to focus on the buyer’s appraised value to ensure they can get sufficient bank financing. On the other hand, if you sell to an investor, your focus will be on the neighborhood’s rental market to ensure your house meets the demands of the surrounding market.

Thinking about investing in real estate? Join Alex Martinez at his FREE training to learn how to get started with house flipping and wholesaling!

How To Find Houses To Flip In Michigan

Now that you know the basic steps involved in house flipping, you may be wondering how to find houses to flip in Michigan. Here are some strategies to pursue:

• Utilize the Multiple Listing Service (MLS): The MLS is a database of properties for sale that real estate agents have access to. By working with a real estate agent - or by getting licensed yourself - you can gain access to the MLS and search for potential properties to flip.
• Network with real estate agents and investors: Attend local real estate meetups and networking events to connect with other professionals in the industry.
• Leverage wholesalers: Wholesalers are individuals who specialize in finding off-market properties and selling them to investors at discounted prices. Reach out to wholesalers in your area to see if they have any properties that would be a good fit for your strategy.
• Look for foreclosures: Check with local banks and lenders to see if they have any foreclosed properties for sale. You can also search for foreclosures on websites like Foreclosure.com.

Another less popular (but still effective) idea is direct-to-seller marketing. Consider implementing a cold call and postcard strategy and simply ask people around the neighborhood if they’d be willing to field an offer for their house.

Do You Need A License To Flip Houses In Michigan?

No, you do not need a license to flip houses in Michigan. However, it might be a good idea to get one anyway.

Without a license, you’ll need to pay a third-party brokerage fee every time you make a sale. If you just become your own realtor, you’ll not only circumvent those fees, but you’ll also get access to the MLS and other educational content.

How Much Do House Flippers Make In Michigan?

Though a house flipper’s salary will largely depend on the scope of the project, the size of the house, and the specific neighborhood within Michigan, you could expect to make anywhere between $10,000 on the low end to $50,000 - $60,000 per flip on the high end. Not too bad!

You can see how turning your house-flipping hobby into a systemized business at 2-4 houses per month can result in a significant earnings potential. 

How To Flip A House In Michigan With No Money

Flipping houses with no money is possible, but it requires a level of creativity and resourcefulness. Here are some strategies you can employ to get your deals funded with no money at all:

• Private lenders: Private money lenders are individuals that lend money to real estate investors. They can provide the funding you need to buy and renovate a property. Some lenders will charge high rates with no profit share and some lenders will charge low rates, but take a share of the profit. It’ll all depend on the specific deal at hand. Be sure to work with your mentor to discuss which options are best for you.
• Crowdfunding: Crowdfunding involves raising money from a large number of people, usually through an online platform or in a pooled investment vehicle.
• Wholesaling: Wholesaling real estate isn’t quite the same as fix & flip investing, but it is a strategy that could be done with no money at all. It involves finding distressed properties, getting them under contract, and then assigning the contract to a different buyer for a fee. 

For a clearer understanding of how to navigate real estate investing without deploying your own capital, don't miss our in-depth video on "How to Get Started in Real Estate with No Money." It's a step-by-step guide that breaks down the process of securing funds for your real estate ventures.

Best Cities To Flip Houses In Michigan

House flipping in Michigan has garnered increasing attention from savvy investors. Key cities that have been spotlighted for their potential include Detroit, Grand Rapids, and Lansing. These cities offer distinct advantages for investors who know how to navigate the market and identify promising opportunities.

• Detroit, MI: Detroit saw home prices dip by 6.3% in April 2023, with homes selling at a median price of $75,000. The slightly longer market duration of 43 days may initially appear as a drawback, but it provides a window of opportunity for house flippers to acquire properties at competitive prices. With 444 homes sold in April this year, the Detroit market holds potential for those who know how to add value through thoughtful renovations.
• Grand Rapids, MI: With a modest increase in home prices by 1.1% compared to the previous year, homes in Grand Rapids are selling at a median price of $269,000. Despite the higher price point, the quick sales pace signifies a robust demand with homes averaging just five days on the market. A total of 192 homes were sold in April 2023, reflecting a healthy turnover for potential house flippers.
• Lansing, MI:  Lansing offers a steady market, with home prices maintaining a level trend from last year, selling at a median price of $125,000. With an average market duration of 28 days and 143 homes sold in April this year, Lansing provides a favorable environment for house flipping.

All three cities boast of a thriving population, robust job market, solid rental market, and high quality of life. Their inherent desirability makes them attractive to potential homeowners, presenting an ideal situation for those venturing into house flipping in Michigan.

Final Thoughts On Flipping Homes In Michigan

Exploring the profitable avenue of house flipping in Michigan can be a significant step forward in your investment journey. However, it's a venture that demands careful consideration, thorough research, and strategic planning. Ensuring you're equipped with the right knowledge and tools can make all the difference in mitigating risks and maximizing returns.

This is where the expertise of Real Estate Skills comes into play. We provide valuable resources and insights to help you navigate through the intricacies of the real estate market. Whether it's understanding the current market trends, formulating a robust business plan, or seeking professional guidance, our team can assist you every step of the way. By partnering with us, you can elevate your house-flipping journey from a gamble to a calculated and rewarding investment strategy.

So, why wait? Dive into the world of house flipping in Michigan armed with knowledge, expertise, and confidence. Let Real Estate Skills guide your path toward success in the real estate market. Begin your journey with us today!