The Michigan Economic situation

Hi all - I wanted to get some input from the braintrust on this fine site - question is: Where do you think the economy in Michigan is heading?
I understand that Michigan and northern Ohio are the ONLY areas in the U.S. that are currently ina reccession, thanks to the auto industry. I see alot of homes going unsold around here ( Midland/ Mt Pleasant) and it makes me apprehensive about investing. If the country fell into a reccession I’m sure Michigan would be teetering on the edge of the “D” word…Depression.
And then what? Who wants to be holding property in that economic climate?
Somebody give me a reason to be more optimistic, please.

When the economy moves downward, people still need a place to stay. The homeowners will then become renters. Renters pay rent to you…you still make money. Keep trudging ahead.

That is to keep you encouraged. But I really answer questions by saying what would I do in your situation. My basic premise for life is that I am not here to survive. I am here to live life like a rock star. It costs the same to be poor in every city in the USA. You can find a place to live for $400/month, ground beef for 89 cents/pound and a 10 pound bag of rice for a buck in any city in the country. But where is it cheap to be rich? Where can I get a 3000 sqft house with a home theatre, 3 car garage and a pool for under $300k. A place with a strong jobs base so the rents are high and you can get rental property that cash flows $200 to $300/month and can be rented in an average of 2 weeks. A place that can allow you to pay for your lifestyle with as few as 20 houses? Also this place has mild winters and a bunch of golf courses and is 40 miles from the beach. That is where I moved to. I travel all over the USA for my real job, and I can’t understand why people will make $150k/year in a city and live like they make $30k in Houston. Remember it is not about the money it is about the lifestyle. What kind of lifestyle do you want? The kind that shovels 22 inches of snow and live in a cracker box or live in a 4,000 sqft house on the lake with a dock with a covered 2 boat lift.

I live like the example above. I eat out every night and play a lot of golf and do extras so I spend a bit more. But my steady state monthly bills (everything from mortgage to dry cleaning) cost me right at $3,000/month. That means that if I get 10 houses that cash flow $300/month I live free. I guess home is where the heart is.

But I want to stay here. I have no desire to move. I guess in that respect I’ll have to make the best of what is available. Michigan isn’t all bad ( although Winter gets a little long in the tooth right about now) It’s my home and where I’ll stay. Just too bad about the current real esate market. But to every downside there is an upside.

I love Michigan. I have only found one place in the USA that I can really say is bad, and it is not in Michigan. Like I said in the first part of the post when the economy gets bad, homeowners become renters thus they become tenants for you. More money for your pocket. Remember they don’t want to move either.

Here’s my 2 cents on Michigan…

You’re absolutely correct. The auto business is killing that state. It’s a 1/2 punch. Blue collar union jobs are going, also the highly educated white collar engineers are taking the buy outs at a pace Ford and the others NEVER saw coming. It’s so bad at Ford that they actually had to pull some of the buyouts because so many had signed up. That is not good.
With that many people unemployed they will have no choice but to move somewhere else. Let’s face it, if you’re smart enough to get an engineering degree you know it’s time to go were the jobs are. And in that industry it’s down south where Mercedes, BMW, Toyota, and Honda are all building plants.

Unfortunately I don’t see a big comeback for the Big 3 anytime soon.
Toyota is just cleaning their clocks. Check out consumer reports top 10 cars just released this week. NOT ONE AMERICAN CAR ON IT.
I’m a big supporter of Unions and the big 3 but in reality they did it to themselves. I’ve owned American cars, it’s a crap shoot. Some were good some were bad, but the 8 Toyotas I’ve had all ran perfectly to over 200,000 miles.

I think Michigan is dead money until you see some signs of life at the Big 3. In my opinion GM looks like they have their sh*t together better than the other 2.

As far as investing goes, I think the “trying to catch a falling knife” saying applys here. You can get hurt doing that!

Those who fail history are doomed to repeat it…

Michigan’s Economy is dying, the big 3 are slowing down everyone is unemployed…I may only be 26, but didn’t this also happen in 1985 to 1989? Economy went into a big stink, home values were cut in half, people were laid off left and right.

What happen? Life moved on and things changed. Remember the old adage “Buy low, Sell high.”
Well when do you think your opportunity to buy low is going to be? When Michigan’s economy is doing well and everyone has a job? Good luck finding the deals you can get now!

Its simple, Now is the time to buy. All the sellers are motivated why? Because they did like you are they are freaking out over whats happening with the Big 3 and want to sell and move. As a sophisticated investor you should be welcoming this change, and seeing the opportunity.

I am sure if you dig and do your research you will see how to make money in Real estate during a downturn. Heck I am in Detroit working with MANY out of state buyers that understand the Buy low sell high concept and they are cashing in BIG TIME on equity because they do not follow the crowd and understand an opportunity when they see one.

Sorry if I sound harsh but Michigan is not going to just fall off the map and end up a 3rd world country. People like myself and other individuals see the “power vacuum” and are working on the opportunity to recreate our economy, to move it away from the old blue collar manufacturing place it was. To a new future.

Besides, Michigan is moving to the Medical industry. There will be rough times ahead for someone that cannot see opportunity so well, but for those of us that can adapt, there are so many possibilities.


Never give up, Never surrender.

I am about an hour from you in Grand Rapids, MI, Let me tell you if its this good when its bad, I hope it stays bad forever. All of the guys that used to buy investment properties have stopped buying, these are guys that I used to think were smart, but now I realize that many were just semi lucky. I am buying like crazy and have already turned 8 of them this year for profits in excess of 130k, I know thats not alot of money, but I havnt paid more than 45k for any of these homes. I just closed on a home friday that I paid 26k for and I will put another 3-4k into it, then refi it by this friday and the bank should give me around 56k at 80%ltv, while im waiting to sell, I will rent it for $650, plus I will have an extra $26k to buy another house with.

Bottom line buy real cheap, sell cheap, and make big dough! If I can do it anyone can.

Hell I wish the CT market was bad, still waiting for abundant deals like you guys see. Around here you could barely tell there is a RE slowdown. We never really spiked bad and it never really dropped yet. I can see the beginnings of it dropping but it hasn’t really pulled a MI yet. Minor price corrections are the norm but nothing horrible and without really knowing the market it would probably not be that noticible.

Watch me emulate the MI economy… :flush