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Reasons to Buy an Investment/Rental Property in Ann Arbor, Michigan

Investing in real estate is one of the most rewarding financial decisions you can make in your lifetime, especially in an area where housing prices are steadily on the rise. And there are several options when it comes to investment properties: 1) You can buy a home with the intention of updating it and reselling it right away, or 2) you can hang onto it for the long-term and rent it out while you wait for the perfect time to sell down the road. Plus, you can choose to turn your home into either a short- or long-term rental!

The artsy and growing college town of Ann Arbor is perfectly positioned for rental properties of all types, as it is home to a large population of college students and recent graduates who favor renting over owning. In fact, approximately 55% of Ann Arbor’s residents are renters, according to the U.S. Census Bureau.

Considering investing in a rental property in Ann Arbor? You’re making a wise decision. But don’t take our word for it! Let’s take a look at some of the many factors that contribute to the city’s hot real estate market, specifically when it comes to rental properties.


Ann Arbor is Growing

Reasons to Buy an Investment/Rental Property in Ann Arbor, Michigan

Population growth is a sign that a city is healthy and desirable. And that’s certainly the case with Ann Arbor, which has grown by 8.7% (or nearly 10,000 people) since the 2010 census. With a 2020 population of 123,851 residents, Ann Arbor has now surpassed Lansing to become the fifth-largest city in the state. Each new resident is a potential renter — or buyer!


The Unemployment Rate is Low

Many move to a new city for an employment opportunity — and the job market in Ann Arbor is especially thriving. Within the last year, the job market has increased by 1.3% and the unemployment rate is currently 3.5% (December 2021), which is below the national average of 4.2%. But perhaps most importantly, Ann Arbor’s job market is expected to increase by 38.1% over the next 10 years, compared to the projected U.S. average of 33.5%.

Some of the city’s largest employers have attracted top-tier talent from all over the country. The largest employers in Washtenaw County include the University of Michigan, Ann Arbor Public Schools, and Toyota Technical Center. One out of three jobs are in educational service, which means education is valued and prioritized in Ann Arbor.


It’s a Highly Educated College Town

Reasons to Buy an Investment/Rental Property in Ann Arbor, Michigan

There’s no doubt that Ann Arbor is a college town, with the University of Michigan playing an integral role in the city’s culture — from football games at The Big House to performances in Hill Auditorium. Not to mention, college students, professors and university staff members make up a large portion of our population. This primarily transient group of people are prime candidates for signing leases on rental properties — that’s where you come in! The demand for rentals is especially high in college settings, as college students and recent grads are less likely to put down permanent roots.

Plus, where there is education, there are highly educated people. For 2022, WalletHub ranked Ann Arbor the second best college town in the nation and the best small city college town, based on academic, social and economic opportunities for students. And in 2021, they also ranked the city as “The Most Educated in America” with a total score of 94.02.

Why does this matter? Because there is a direct correlation between highly educated people and homeownership. According to a recent study by Trulia, the more advanced the education, the more likely someone is to own a home.


Rent Numbers Are Increasing

Typically, an increase in rent is bad news. But if you’re the one benefiting from that increase, you’ll want to cash in on this upward trend. According to Point2Homes, the average rent for a single-family home in Ann Arbor is about $2,784 and a rented apartment typically costs about $1,749, which is an 11.1% increase compared to the previous year. And if the city follows the trajectory of the nation as a whole in 2022, rent prices will only continue to go up!


Housing Costs Are Steadily Rising

Reasons to Buy an Investment/Rental Property in Ann Arbor, Michigan

Similarly, housing costs are steadily rising as well, which means now is the time to get your hands on an investment property. According to our October 2021 report, the median price of single-family homes in Ann Arbor was $510,000, which was up 12% compared to 2020. While the market is expected to cool down after an unusual couple of years, housing prices are likely to show a steady increase in the long-term.


It’s an Owner’s Market

It’s no secret that just about every market is currently considered a “seller’s market,” due to a disproportionate ratio of people looking to buy and homes available for sale. And when it’s a seller’s market, it’s also an owner’s market, as those who already own a property (or several) are benefiting from the increased demand and low inventory. After the prosperous last two years in real estate, homeowners in Ann Arbor are thankful to already be locked in and benefiting from increasing property values.


It Has a High Median Household Income

Several of the above-mentioned factors, including Ann Arbor’s healthy job market and college town culture, contribute to the city’s economic status. At the 2019 census, the city’s median household income was $65,745, which was slightly higher than the national median household income of $65,712. A healthy local economy often translates to a promising housing market — which benefits both sellers and landlords.


Interested in owning an investment property? We can help!

Simply put, Ann Arbor is one of the most promising markets in Michigan. Interested in getting involved in the market, either for your very first home or a secondary investment property? Our agents are extremely knowledgeable about the area and can help you navigate the ins and outs of purchasing an investment rental property in the Ann Arbor area. Contact us to get connected to one of our agents.

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