Purchasing East Lansing Rental Properties: What You Need to Know

East Lansing—as most residents and visitors know—is a wonderful community. It has a terrific mix of high quality of life and affordability. In fact, according to Livability.com, East Lansing is one of the top 100 best places to live in the United States.  

East Lansing’s high quality of life and constant inflow and outflow of college students make it an attractive place to purchase rental properties.

I have seen it myself.

Since 2007, I have specialized in the sale and acquisition of East Lansing rental properties. If you are thinking of purchasing or selling a rental property in the city, there are several important things to keep in mind. Specifically, I am referencing the different types of license classes that can be relevant to renting a home. By understanding what they are and the differences between them, you can efficiently purchase and rent out property in the East Lansing area. You can also avoid unforced errors which can cause lost time, money, and legal headaches.

Purchasing and Renting Out Properties in East Lansing

To start owning and managing rental property in East Lansing, prospective landlords must proceed through a variety of requirements as outlined here. After they purchase the actual property, prospective landlords must apply for an initial rental license. The process, on average, takes about two to five months, so prospective landlords must be cognizant of this fact when evaluating their budget and potential income.

In that initial application form (which you can find here), there are several important requirements that applicants must follow. One of those, as alluded to above, is ensuring that you are seeking the correct class of license. You can find more detailed documentation on classes of licenses here, but the bottom line is that there are six different classes. The major differences among these licenses center on factors like renewal dates, the type of dwelling that leasing or renting out, whether the owner resides in the building, and specifics about people who can become tenants in a room or building.

For instance, a class I license is renewed every 39 months. It authorizes the owner of a one-family dwelling in which the owner resides to lease or rent a room to one person. By contrast, a class III license is renewed every 13 months. It authorizes the owner of a one-family dwelling in which the owner doesn't reside or a two-family dwelling to lease or rent the dwelling to a family of two unrelated people per rental unit. There are additional caveats to these general licensing classes, especially for owners who are applying for initial rental licenses. Those caveats deal with residential zoning districts (you can find more details here).

While there was a moratorium on licensing before I entered the real estate business in 2004, applying for the right initial rental license is critical. The Rental Housing Division of East Lansing regulates rental licensing in the city and inspections for licensing. If you are found to be renting without a license or are renting out your property in violation of your rental license, you may be subject to fines and other penalties.

Therefore, before even purchasing your rental property, it is helpful to foresee how you plan on using your property. Think about whether you want to live in the property itself and how many people you want to be tenants in your building. Along with this, you must take your time when completing the application and ensure that you have not made any mistakes. Not only could you be penalized for applying for the wrong class of rental license, but you will be spending your valuable time fixing errors that you could have avoided.

Because of this, I recommend that you do not complete the application by yourself. Instead, I encourage you to work with an expert in this area. Whether you are an investor or the parent of an MSU student, working with a professional can save you time and give you the peace of mind that you are complying with these important East Lansing regulations.

Starting Your Journey

East Lansing is a great place to purchase a rental property. The opportunity is significant. However, I encourage you to work with an expert to ensure that you are applying for the correct rental license. Whether you decide to work with me or another professional, hiring a trusted guide can make the process much easier.