If you want to buy a house in Grand Rapids and rent it nightly without living there, the city's rules are the first obstacle. Most Grand Rapids investors who run whole-home short-term rentals do it 30 to 60 minutes west, along Lake Michigan.
In short: LendingStreet finances short-term rentals in West Michigan with DSCR loans that can qualify on projected nightly revenue on some programs, with no W-2s or tax returns and LLC borrowers allowed. Loans start at $150,000, purchases go up to 80% LTV and the minimum credit score is 620. Grand Rapids has generally allowed short-term rentals only where the host lives at the property and holds a license, which rules out most investor-owned whole-home rentals in the city, so investors usually look to lakeshore and inland lake communities that permit them.
The City of Grand Rapids has long limited short-term rentals to a host's primary residence, with a license, rather than allowing whole-home rentals by non-resident owners in residential neighborhoods. The city has debated changes over the years, so confirm the current ordinance with the city before you buy. A lender that qualifies on nightly income needs the property to be able to operate legally as an STR.
Suburbs set their own rules. Some, such as Wyoming, Kentwood, Walker and the surrounding townships, regulate or restrict short-term rentals through zoning or licensing, and many subdivisions have covenants that ban rentals under 30 days. If an STR is not allowed, a furnished 30-day or longer rental to traveling nurses or relocating professionals may still work, financed on market rent.
Lake Michigan shoreline communities draw summer visitors from Grand Rapids, Chicago, Detroit and Indianapolis: Grand Haven and Spring Lake, Holland, Saugatuck and Douglas, South Haven and, farther north, Muskegon, Whitehall and Ludington. Gun Lake and the smaller inland lakes of Barry, Newaygo and Montcalm counties also attract weekend renters.
Several shoreline cities and townships cap the number of short-term rental permits, limit them to certain zones or require licensing, inspections and a local contact. Rules often differ between a city and the township next to it, so check the specific parcel. See our Michigan STR page for statewide markets, including northern Michigan.
Lakeshore demand peaks from Memorial Day through Labor Day, with tulip season in Holland in spring and color tours in the fall. Winter is quiet in most beach towns. In Grand Rapids itself, demand comes from the Medical Mile hospitals and research institutes, ArtPrize and other downtown events, conventions at DeVos Place and families visiting Grand Valley State, Calvin and the other colleges.
A revenue projection for a beach cottage should show strong summer months and very slow winters. Underwriters look at the annual average, but you need cash reserves for the off-season.
On some programs, a third-party revenue projection can stand in for a lease. Underwriters compare projected monthly revenue with principal, interest, taxes, insurance and any HOA or association dues, and some programs apply a haircut or set a different DSCR threshold for STRs. For a property you already run, 12 months of booking history is usually the best evidence.
If your projection comes in lower than expected, our guide to low revenue projections explains common fixes.
This example is illustrative and not a quote. An investor buys a three-bedroom cottage a few minutes from Lake Michigan for $485,000, in a township that permits whole-home short-term rentals. A third-party projection estimates $57,600 a year, or $4,800 a month on average, with most revenue in summer.
At 75% LTV the loan is $363,750. Estimated principal and interest is about $2,543. Property taxes at the non-homestead rate after uncapping are budgeted at $760 a month and an STR insurance policy at $220, for a total payment of about $3,523. DSCR on the projection is about 1.36x, or about 1.09x at 80% of projected revenue.
| Item | Amount |
|---|---|
| Purchase price | $485,000 |
| Loan amount (75% LTV) | $363,750 |
| Projected monthly revenue | $4,800 |
| Estimated principal and interest | $2,543 |
| Property taxes (non-homestead, uncapped) | $760 |
| Insurance | $220 |
| Total monthly payment | $3,523 |
| DSCR on projection | About 1.36x |
| DSCR at 80% of projection | About 1.09x |
Michigan caps annual increases in a property's taxable value while the same owner holds it, then uncaps the value when it sells. A cottage that sold years ago may have a low taxable value; after your purchase, it resets toward half of market value, and the tax bill can jump. The principal residence exemption, which removes a large share of school operating millage, does not apply to an investment property.
Budget taxes on the new, uncapped, non-homestead figure. The township or city assessor can help estimate it. Michigan also charges state and county transfer taxes on sales, customarily paid by the seller, and nightly stays may be subject to state and local lodging taxes.
Shoreline homes can face erosion, high-water and storm exposure, and some sit in mapped flood zones. Insurers may limit coverage on bluff-top homes with erosion history. Winterizing, snow removal and frozen-pipe risk add operating costs in the off-season. Get an STR-specific policy quote early.
Budget for furniture, linens, beach gear, a keyless lock and professional photos. Cleaning, supplies, utilities, internet, platform fees and a local manager come out of revenue, so the lender's ratio is not your profit. Many owners raise off-season occupancy with monthly winter rentals.
Send the address, the city or township's STR permit status, projected revenue or booking history and your target loan. If you already operate the property, a refinance can use booking history, with cash-out up to 75% LTV and seasoning that varies by program. Call (877) 298-1001 or use the form below.
Generally not as a whole-home rental. The city has limited short-term rentals to hosts' primary residences with a license. Confirm the current ordinance with the city.
Mostly along Lake Michigan and on inland lakes, in communities that permit whole-home rentals. Many cap permits or limit zones, so check the specific parcel.
On some programs, yes, using a third-party projection, as long as the property can legally operate as a nightly rental.
Michigan uncaps taxable value when a property sells, and investors do not get the principal residence exemption.
It can be financed as a long-term or mid-term rental on market rent with a standard DSCR loan.
Yes. A refinance can use booking history. Cash-out goes up to 75% LTV, and seasoning varies by program.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
DSCR loans start at $150,000 with no stated maximum.
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