Properties near Lake Michigan can be attractive targets for short-term rental investors. However, one factor will determine whether your investment strategy holds up before you ever sign a closing document.
It isn’t the mortgage rate or an inspection report. You need to know whether a short-term rental permit is available for the property.
The answer is increasingly complicated along the stretch of Lake Michigan in Southwest Michigan. Buyers who skip this question are learning the hard way, sometimes after closing.
ABOUT THE EXPERT
Paul DeLano is the Broker and Owner of The Lake Life Realty Group. Known locally as the “Lake Guy,” Paul has over 30 years of combined experience in real estate, mortgage finance, and land development. Since 2012, he has been the #1 Inland Lake REALTOR® in Southwest Michigan, holding the highest market share for lakefront sales across Cass, Berrien, St. Joseph, Kalamazoo, and Van Buren counties. He focuses exclusively on buying and selling lake properties, tailoring the experience for local residents and second-home buyers from the greater Chicago and Indiana areas.
Short-Term Rental Permit Caps Are a Real Issue
Every township handles short-term rental permits differently. Some are annual, while others might run for a few years. A few townships have no cap at all. But a growing number of Southwest Michigan townships have set hard limits, and in several communities, those limits have already been reached.
Chikaming Township is the clearest example. The township set a cap of 515 short-term rental permits. When that cap was announced, roughly 460 permits were already in place. The remaining spots disappeared almost immediately.
As of 2026, no new permits are available in Chikaming until 2027. Close on a property today, expecting to list it on Airbnb or VRBO tomorrow, and you are waiting at least a year. Maybe longer, depending on what happens when the next application window opens.
This is not an outlier. A buyer currently working with my team was evaluating five municipalities in the same general area. Only one was issuing new short-term rental permits. The other four were capped out.
That is four out of five townships with the door closed to new rental operators. That ratio should reframe how any investor approaches this market.
Permit Rules Have Changed, and It Matters for Investors
In some townships, short-term rental permits used to transfer from seller to buyer at closing. That has changed. At least one township along the Lake Michigan shoreline has updated its ordinance to make permits nontransferable. When the property sells, the new owner must reapply.
If the cap has been met by the time the new application goes in, you won’t get a permit. The rental income a buyer factored into their purchase price and financing plan disappears before they even get the keys.
I have spent nearly three decades working exclusively in Southwest Michigan lake markets. In this market, a single regulatory shift can move a property from a viable income asset to a pure lifestyle purchase overnight.
“One of the townships changed its ordinance this year, where previously the short-term rental permits were transferable upon sale, and now they’re not. So you have to reapply. And if the cap has been met for the township and there are no more available when you reapply, you might not get a permit again.” – Paul DeLano, Broker and Owner
Not sure whether the property you are eyeing has a transferable permit? Reach out to the Lake Life Realty team before you fall in love with the rental income projections.
Verify Permit Status Before You Write an Offer
Most township and municipality websites post their short-term rental ordinances, current permit counts, and application windows. When that information on the website is outdated, a direct call to the local zoning administrator typically gets you a straight answer within minutes.
The Michigan Department of Licensing and Regulatory Affairs does not directly govern local short-term rental permits. Township authority to regulate rentals flows from state-enabled zoning law. The rules each township writes are local, and they vary more than most buyers expect.
Once you are under contract, your negotiating position is set. Discover mid-transaction that no permits are available, and your options narrow quickly. You can walk away, renegotiate, or close, knowing rental income is off the table. None of those are positions you want to land in by surprise.
The HOA layer adds another complication worth checking early. Even in townships that allow short-term rentals and have permits available, a homeowners’ association can prohibit them. Short-term rental restrictions are among several hidden layers of governance that catch Lake Michigan buyers off guard after closing.
When the Rental Income Math Stops Working
Short-term rental income has become a meaningful factor in how some buyers justify the purchase price of a Lake Michigan property. That math only works if the permit is real and obtainable.
Buyers often build rental income into their financing assumptions. If you haven’t confirmed permit availability, that income might not exist. The property will still be a beautiful piece of Southwest Michigan lake real estate. But the numbers that made it pencil out may be gone before the ink dries.
Our post about how buyers structure lake purchases financially is a great read. It covers some of the financial questions you might ask alongside your permit research.
Tighter Regulation Creates Opportunity for Prepared Buyers
The short-term rental market along Lake Michigan is not disappearing. It is tightening, reorganizing, and becoming more regulated. That creates real pressure for buyers who assume the rules are the same as they were a few years ago.
It also creates opportunity. Permitted properties in capped townships carry a genuine scarcity premium. A property that comes with an active, transferable permit is worth more than the underlying real estate suggests on paper.
Knowing the permit landscape in each township before you walk a single property is not optional if rental income is part of your plan. It is a crucial part of due diligence.
Questions Buyers Ask About Lake Michigan Short-Term Rental Permits
What is a short-term rental permit, and do I need one for a Lake Michigan property?
A short-term rental permit is a local government authorization allowing a property owner to rent their home for shorter stays. That typically means rentals of 30 days or less. Most townships along the Lake Michigan shoreline require one before listing on any rental platform. Operating without one exposes owners to fines and forced removal from rental platforms. Requirements vary by township, so verify with the municipality where the property is located.
How do I find out if a township has hit its short-term rental permit cap?
Check the township or municipality website. Most post their ordinances, current permit totals, and application windows. If the information is outdated or unclear, call the local zoning administrator or code enforcement office. A five-minute call should give you an answer. Do not rely on the listing agent’s characterization of permit availability.
What happens financially if I close on a property and then discover no permits are available?
If no permit is available, you cannot legally rent the property short-term in that township. The rental income you projected disappears until a new permit window opens. That window may be a year or more away, with no guarantee a permit will be issued even then. This is why permit verification needs to happen before you write an offer.
Can an HOA prohibit short-term rentals even if the township allows them and permits are available?
Yes. Township ordinances and HOA rules are different. An HOA can ban short-term rentals even if the township has permits available. Always review HOA documents alongside township ordinances before building any rental income assumption into your purchase plan.
What is the difference between a township short-term rental ordinance and state law in Michigan?
Michigan’s Zoning Enabling Act grants townships the authority to regulate land use, including short-term rentals, at the local level. There is no single statewide short-term rental permit. Each township writes its own rules, sets its own caps, and determines its own transfer policies.
If short-term permits are unavailable, is a long-term rental an option for Lake Michigan properties?
Long-term rentals, generally defined as leases of 30 days or longer, are typically not subject to short-term rental permit requirements. Some buyers pivot to this model when short-term permits are capped. However, long-term rental income is significantly lower per night than short-term rates. You’ll also need to rebuild financial assumptions from scratch if that is the path forward. Confirm with the township that long-term rentals are permitted as a use, and review HOA documents for any restrictions.
Verify the Permit Before You Fall in Love With the Property
The short-term rental market along Lake Michigan is not going away. But it is no longer the open landscape it was a few years ago. Caps are real, and transfer rules have tightened. The gap between what a listing looks like and what it can actually generate in rental income has never been wider.
Get the permit question answered before you fall in love with the property. Reach out to the Lake Life Realty team early in your search. Knowing exactly where each township stands gives you a clear picture before you start walking properties.
Information based on inland lake sale information provided by Southwestern Michigan Association of REALTORS® based on inland lake sales in Cass, Berrien, St. Joseph, and the southern half of Kalamazoo and Van Buren counties.
Paul DeLano is the founder of The Lake Life Realty Group. He has closed over 1,069 Michigan lake property transactions since 2012 and holds the highest market share for lakefront sales across Southwest Michigan. His background spans mortgage finance, land development, surveying, and financial advising, all applied exclusively to lake real estate.
*Information based on Lake Michigan waterfront and lake access provided by the Southwest MIchigan Association of Realtors based on sales from Stateline to South Haven