Investing in real estate might sound intimidating at first, but it doesn’t have to be! You don’t need to be a full-time investor, own a huge portfolio, or flip a dozen houses to start building wealth through real estate. Sometimes, it starts with just one smart purchase.
Here in Michigan, we’re lucky to have a variety of markets that offer real opportunity: affordable homes, strong rental demand, and neighborhoods on the rise. Real estate can be a powerful way to create long-term financial stability, whether you’re looking for passive income, equity growth, or just a more secure future.
In this blog, we’ll walk you through the basics, help you think through your goals, and share what we’ve learned from working with new investors right here in Michigan.
Understanding the Basics: What Is a Real Estate Investment Property?
A real estate investment property is any property you purchase with the intention of making a return, either through rental income, future resale, or both. There are a few common types of investment properties:
- Single-family rentals: This is a great entry point for many new investors.
- Multi-family units: Think duplexes or triplexes where you can rent out multiple units at once (and sometimes live in one yourself!).
- Short-term rentals: This works best in vacation spots or areas with high visitor traffic.
- Fix-and-flip projects: Buy a home in need of updates, renovate it, and sell it for a profit.
Here’s the good news: You don’t need to dive in with something huge or complicated. Even owning just one rental home can help you build long-term wealth. The key is to be intentional, do your research, and work with someone who can guide you through the process step by step.
Key Steps to Take Before You Buy
Before you jump into buying your first investment property, it’s important to lay a solid foundation. A little prep work now can save you major stress (and money) down the road. Here’s where to start:
1. Get Your Finances In Order
Talk to a lender early. Understanding your budget, loan options, and what kind of down payment you’ll need is key. Investment properties typically require more money down than primary residences, usually 15-25%, and your lender will want to see a strong financial profile.
2. Define Your Investment Goals
Are you looking for consistent monthly rental income? Hoping for long-term appreciation? Planning to eventually own multiple properties? Knowing what success looks like for you helps shape your strategy and property search.
3. Work With Someone Who Knows the Market
Michigan has a lot of variety, and the right property in the right area makes all the difference. Real estate agents (like Erin Wasik) help first-time buyers spot opportunities, avoid money pits, and crunch the numbers to make sure the deal actually works for your goals.
What to Look For in a Profitable Investment Property
Not every property makes a good investment, and that’s ok! The key is knowing what signs to look for and which red flags to avoid. Here’s what I always encourage new investors to keep in mind:
1. Location, Location, Location
It’s the oldest rule in real estate for a reason. A great location means more reliable tenants, fewer vacancies, and stronger long-term value. Look for areas with job growth, good schools, local amenities, and low crime rates. Bonus points if it’s walkable or near public transit.
2. Property Condition
You don’t need to buy a brand-new home, but watch out for homes that need major repairs. Cosmetic fixes? No problem. Foundation issues or a roof that’s on its last leg? Those can eat into your profits fast. Always factor in repair costs when doing the math.
3. Rental Demand
Do people actually want to live in this area? Research vacancy rates, rental comps, and average time on market. If you’re in a college town, tourist area, or growing city, chances are you’ll find strong demand.
4. The Numbers Need to Work
Run the numbers carefully. Estimate your expenses (mortgage, taxes, insurance, maintenance, property management) and compare them to your expected rental income. If the cash flow is solid and you’ve built in a buffer for surprises, you’re in a good place.
Financing Your First Investment Property
Financing an investment property is a little different than buying your primary home, but it’s totally doable when you know what to expect. Keep these things in mind as you explore your options.
Explore Your Loan Options
Most first-time investors go with a conventional loan, which typically requires a 15-25% down payment for investment properties. If you’re house-hacking (living in one unit of a multi-family home and renting out the others), you might qualify for an FHA loan with a lower down payment. There are also DSCR loans (Debt-Service Coverage Ratio) designed specifically for investment buyers based on the property’s income potential.
Know What Lenders Look For
To qualify, lenders will look closely at your credit score, debt-to-income ratio, and available cash reserves. Having a strong financial profile helps you secure better interest rates and terms. You’ll also want to show that you have enough funds to cover several months of expenses in case your rental sits vacant or needs repairs.
Be Ready for Upfront Costs
Aside from your down payment, be prepared for closing costs, potential renovations, and that all-important emergency fund. Having some cushion gives you breathing room if anything unexpected pops up (and in real estate, it often does!).
Ready to Explore Your First Investment?
Real estate investing doesn’t have to be overwhelming or out of reach. With the right guidance, a solid plan, and a clear understanding of your goals, you can absolutely start building wealth through Michigan’s real estate market, even if you’re brand new to it.
From choosing the right property to running the numbers and lining up financing, every step matters, and Team Erin Wasik is here to help you through it. They’ve worked with plenty of first-time investors who started with one smart purchase and built something truly impactful for their future. You can, too.
If you’re ready to explore what real estate investing could look like for you, let’s talk! Take that first step toward building wealth, right here in Michigan.
