Whether it's dorms, apartments, houses or condos, many of Michigan State’s nearly 50 thousand students are looking for a place to live in the city of East Lansing — but who owns the property?
“As far as investment properties, a college town is awesome, because you'll always basically have a renter,” Owner and Co-Founder of Real Estate Redesigned at Berkshire Hathaway HomeServices Dominic Lee said. “So worrying about whether or not your property will be rented is a lot less risky than outside of a college dorm.”
Landlords in East Lansing have a unique opportunity. Due to the demand for housing in college towns, the property investment can begin reaping rewards quicker as properties have a good overall appreciation — an increase in the value of the asset over time.
“The biggest thing I see in why people should (invest in college towns) is the overall appreciation,” Associate Broker at Berkshire Hathaway HomeServices Rob Buffington said. “I mean, if you have a long-term plan … properties are going to appreciate. And most likely, they're gonna appreciate quicker than some typical investment property, like if you invested in Lansing, a property in East Lansing will appreciate a little bit more.”
Buffington has specialized in the sale and acquisition of East Lansing rental properties since 2007.
East Lansing varies in that there is a moratorium on rental licenses. A home cannot be rented out if it does not have a license and the license classifies properties on how many tenants can live there.
“In normal towns, you don't really have that, in Lansing, you do have to have a rental license, but it's not as strict as East Lansing. So it varies a lot differently,” Lee said. “Because if you purchase a property in East Lansing … if it doesn't have a rental license, and I try to rent it to students or something, I'd actually be breaking the law.”
Even in towns just outside of East Lansing, like Mason, you don’t necessarily need a rental license as long as it fits with code, Lee said.
Ideally, homes should be purchased in September and October to be ready for the next fall semester. Initial rental licenses in East Lansing take about two to five months to process and cost $1,550, according to the city of East Lansing.
The process includes a completed application with all required documents, administrative review by the housing office, and inspection followed by a letter indicating any code violations that must be fixed. Then the commission hearing forwards the recommendation to City Council and a Council Hearing where the final decision is made.
“What happens often is because obviously, East Lansing doesn't want college students to be living in rough living situations, they have certain guidelines for what the property has to have,” Lee said. “So the inspector comes through the house and marks everything up that needs to be repaired or gives you the green light. And then after that they submit it to the city, obviously and then you go through the hearing and all that. So it's a pretty extensive process and it can be expensive.”
Due to the length of the process, it’s not always guaranteed, but homes can be purchased with a preexisting license that has to be renamed under the new owner.
When looking for off-campus housing, parents of students often consider purchasing property for their students to live in with friends while they’re studying in East Lansing, rather than renting.
“Now you have investors that will look at it, but you also have … all these parents that come in looking for places for the kids to rent, and now they see this house for sale, and they think, well, ‘I never thought about the house for sale,’” Buffington said.
Deciding to purchase a home depends on the family’s situation, Buffington said. If students are going to be living there longer to continue their studies or there are multiple students who will be living in the house across a few years, it could be a good investment for the parents.
Animal science sophomore Erin Boyle-Levy will be living in a three-bed, two and a half bathroom condo her parents purchased for her to live in the next few years.
“I'm looking to go to vet school. That's the plan. And so since I'm a sophomore right now, if that happens, and I go to MSU’s vet school, I'll be here for the next six years,” Boyle-Levy said. “My other two roommates, we were looking into renting like a house or something ... and I was updating my parents about all this, then one day, just kind of out of the blue (my dad) texted me and he goes, ‘If you find a house, that's a good price, I'll buy it for you.’”
Boyle-Levy and her parents began looking for property to purchase in East Lansing. She was familiar with the area and her father focused on the logistics of the home, eventually opting for the condo option over house or apartments.
“We found two condos, and then we went and toured them. And we just went to one that we thought we could really be liked and didn't take much work. And I had two roommates lined up and everything,” Boyle-Levy said. “So I think we put in the offer for the condo three weeks ago, and we're supposed to close next week.”
Investing in property in East Lansing can be worth the investment, but realtors recommend becoming familiar with the regulations of East Lansing and seeking advice from experts.
“The biggest advice I can give people is to find someone that actually knows this niche of the market, if they're serious about investing in East Lansing or even just want to learn more about it, they need to know someone that knows, they need to hire someone or recruit the expertise of someone that knows the different classes of licenses in East Lansing,” Buffington said.
This article is part of our Housing Guide print edition. View the full issue here.
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