Buying an STR Property in Southwest Michigan:
Due Diligence Before You Commit

The regulatory environment is the first thing to understand, not the last

Over the last several years, the communities along the West Michigan lakeshore have significantly tightened how they regulate short-term rentals. The changes have been uneven, inconsistent, and fast-moving. Some townships have enacted hard caps on the number of STR licenses they'll issue. Some have enacted owner-occupancy requirements. Some have created tiered license structures with different rules depending on whether the owner lives on-site. Some have banned new STR licenses in certain zoning districts entirely.

These rules are not uniform across communities. What's permitted in one township may be prohibited in the one next to it. And they change. I've had buyers purchase a property they intended to short-term rent, and within weeks of closing the township enacted a moratorium on new STR licenses. The buyer owned a property they could no longer legally rent, with a financial plan built around income that was no longer available to them. That's not hypothetical. It happened.

A property that's currently operating as a successful short-term rental may be doing so under a license that does not transfer to a new owner. The listing will often not tell you this. The seller may not know, or may not volunteer it. Confirming license transferability is one of the first questions that needs to be answered before you make an offer.

What to verify before you write an offer

If you're buying primarily for rental income, this checklist belongs in your research before you're in contract, not in your inspection contingency period.

• 1 Current license status: Does the property currently have an active STR license? Is that license transferable to a new owner, or does the buyer need to apply for a new one? Is there a waiting list or cap that would prevent a new application from being approved?
• 2 Zoning classification: Is the property in a zone where STR use is currently permitted? Are there any pending zoning changes or ordinance reviews that could affect it?
• 3 Owner-occupancy requirements: Some municipalities require the owner to be present during rentals or to reside in the property for a minimum number of days per year. If you're not planning to be there regularly, this matters.
• 4 Night minimums and guest caps: Some ordinances impose minimum stay requirements or occupancy caps that directly affect what you can charge and when you can rent.
• 5 HOA or association rules: If the property is in a development with a homeowners or condominium association, confirm separately that the association permits short-term rentals. Many do not, regardless of what the municipality allows.

Get the answers from the township directly, in writing where possible. Don't rely on what the listing says, what the seller says, or what a property management company tells you revenue will be.

What actually makes a lakeshore property work as an STR

Not every property that can legally operate as a short-term rental will perform well as one. The gap between a mediocre STR and a strong one often comes down to a handful of features that guests consistently prioritize.

Lake access is the single biggest driver of demand and nightly rate on the West Michigan lakeshore. There's a meaningful difference between direct private frontage, deeded lake access through an association, and a property that's a short walk to a public beach. Each of those represents a different market, a different guest expectation, and a different revenue ceiling. Know exactly what you're buying before you build a revenue model around it.

Bedroom count matters more than square footage for STR economics. A well-configured four-bedroom property in a solid location will typically outperform a larger but oddly-laid-out home. Guests are booking for groups, and the ability to sleep eight to ten people comfortably with appropriate bathroom counts drives both occupancy and rate.

Outdoor amenity expectations on the lakeshore are high. Properties with decks, fire pits, hot tubs, or outdoor entertainment areas consistently outperform comparable properties without them. These aren't luxuries from a booking standpoint. They're the features guests filter for when they're choosing between listings at similar price points.

Proximity to the commercial areas of Saugatuck, Douglas, or New Buffalo adds rental value for guests who want walkability. Properties farther out in more rural settings attract a different guest profile and tend to draw stronger occupancy in summer but slower shoulder seasons.

Investment property financing is different from vacation home financing

If you're buying primarily to rent, you need to understand how lenders will classify the property, because it affects your rate, your required down payment, and how your application is underwritten.

Lenders draw a line between "second homes" and "investment properties." A second home is one where you personally occupy it for a meaningful portion of the year and it's not managed through a rental program. An investment property is one you primarily intend to rent. The distinction matters: investment property loans typically require 20–25% down, carry a higher interest rate than a comparable second home or primary residence loan, and have stricter debt-to-income requirements.

If you describe the property as a second home on your loan application but you actually intend to rent it most of the time, that's a misrepresentation. Lenders ask the question deliberately. Answer it accurately, and then work with a lender who knows how to structure vacation rental financing properly.

Property management: what it actually involves

Most buyers who live in Chicago and want to operate a Southwest Michigan STR will use a professional property manager. That's usually the right call. But understanding what you're buying when you hire one matters for your financial model.

Management fees on the lakeshore typically run 20–30% of gross rental revenue. That's not a fixed cost you can optimize away. It's the cost of having someone handle guest communication, check-ins, turnovers, maintenance coordination, and the inevitable middle-of-the-night calls when something breaks. If you're not local, you're paying for that coverage whether you like it or not.

Cleaning fees get passed to guests on most platforms, but turnovers on a busy lakeshore property are more involved than a typical residential cleaning. Linens, restocking, exterior cleanup after summer rentals, and winterization and de-winterization add real cost over the course of a year.

Maintenance on a frequently-rented property runs higher than on a property that sits vacant or is lightly used. Appliances get used hard, outdoor furniture takes abuse, and the accelerated wear from guest turnover shows up in repair and replacement costs faster than most buyers expect. A realistic maintenance reserve for an active STR property is higher than the standard 1% of value rule of thumb suggests.

Read the companion article on revenue reality: STR Revenue Reality: What the Numbers Actually Show walks through the full expense picture and how to build a pro forma that reflects what these properties actually net.

EGLE and what it means for property improvements

Michigan's Department of Environment, Great Lakes, and Energy regulates development near water, wetlands, dunes, and the Great Lakes shoreline. If the property you're buying is in or near any of those zones, EGLE may have jurisdiction over things you want to do with it.

For STR buyers specifically, this tends to come up around two things. First, improvements that would increase the property's rental appeal: adding a deck, expanding outdoor entertaining space, modifying a dock, adding a structure, or doing any grading near the water. These may require EGLE permits, and not all of them will be approved. Second, septic system replacement or upgrade, which is often necessary on older properties and which has its own regulatory requirements near water.

The issue isn't just that the permit process takes time. It's that some improvements simply won't be permitted on properties in certain locations. If your investment case depends on adding a lakeside deck or expanding a structure in a dune zone, verify that it's actually achievable before you're in contract. The time to learn that it isn't is before you own the property.