Why Michigan? The Market Thesis

Every investment strategy is a claim about a place, whether it admits it or not. Ours is explicit: mid-Michigan cities — Flint and Saginaw specifically — are among the best markets in America for the owner-financed note model. Not because they're secretly about to boom. Precisely because they're not. This article lays out the thesis honestly, including the parts that look like weaknesses until you understand the model.

What actually happened to these cities

Flint and Saginaw are archetypes of the American industrial arc. At mid-century, General Motors employed roughly 80,000 people in Flint alone; the city built tens of thousands of sturdy working-class homes — brick, hardwood, real lots — to house that workforce. Then five decades of deindustrialization removed the jobs faster than anyone could remove the houses. Flint's population fell from nearly 200,000 to under 80,000; Saginaw followed a similar curve. The result is a durable structural condition: far more sound housing than financed demand, which is the precise environment where houses trade for a fraction of replacement cost.

Understand what that means and what it doesn't. A $30,000 house in Flint is not a $30,000 house because it's condemned — the same structure would cost $150,000+ to build today and would sell for several times more in a financed market. It's $30,000 because the buyer pool is constrained to cash. That's a financing condition, not a housing condition, and financing conditions are exactly what a private note operator supplies.

The three ingredients, and why they rarely coexist

• —Deep discounts: homes at 25–40% of financed value, giving every note collateral coverage institutional lenders can only dream about.
• —A wide financing gap: banks won't write mortgages at these price points, so owner financing faces essentially no competition from cheaper capital.
• —Real occupancy demand: tens of thousands of working households already live in these cities, pay $700–$1,000 in rent, and would rather own.

Notice the tension: hot markets have demand but no discounts; dying rural markets have discounts but no demand. The model needs both at once, plus an absent banking sector — and that triple overlap is genuinely rare. Legacy industrial cities of a certain size are almost the only places it occurs. Michigan adds two structural bonuses: land contracts are a mainstream, court-tested instrument here with over a century of case law, and property taxes on low-valued homes are modest in absolute dollars, which keeps escrowed payments affordable.

Addressing the obvious objection

'But Flint — the water crisis, the headlines.' Direct answer: the model does not require these cities to recover. It requires families to keep living in them, which seventy-plus thousand people in Flint demonstrably do, working at hospitals, schools, logistics hubs, and the manufacturing that remains. The note's return is contractual — it was fixed the day the paper was signed, and not one basis point of it depends on appreciation. If the cities stabilize or improve (and both have active redevelopment, anchored by healthcare and universities), the borrower's equity grows and refinance exits accelerate — pleasant, but a bonus. The pessimistic scenario was already priced in at purchase. That's what buying at 30% of replacement cost means.

The thesis doesn't need Flint to boom. It needs families to keep choosing to own rather than rent — and that choice is older than any headline.

Why local matters more here than anywhere

These markets are unforgiving of remote capital, and that's a feature of the moat. Value in Flint and Saginaw is block-by-block: the same floor plan is a sound investment on one street and a donation on the next. No algorithm prices that; Zillow is famously unreliable below $100,000. Operating here requires walking the houses, knowing which blocks hold, which contractors show up, and which families are ready for ownership — knowledge that compounds with years and cannot be spreadsheeted from out of state. It's why institutional capital, which has flooded Sun Belt single-family rentals, has left this niche alone, and why the spreads have stayed wide for the operators who actually live in it.

What would change our minds

A thesis you can't falsify is a belief, so here are ours: if banks resumed small-dollar mortgage lending at scale, the financing gap would close, cash discounts would compress, and this model would shrink — we'd celebrate for the cities and adapt. If population loss accelerated far beyond current trends, occupancy demand could thin in weaker pockets — which is why block selection, not city selection, is the real underwriting. We watch both. Neither is moving against us today: small-mortgage origination remains structurally unprofitable for banks, and the cities' populations have largely stabilized. The gap that created this opportunity is decades old and shows no sign of closing.

Invest in what you can verify: houses at prices you can confirm at the county, occupied by families whose payments you can see, in cities whose economics are exactly as unglamorous — and exactly as durable — as the thesis requires.