Elijah Daniel, 25, said he bought it as an act of rebellion against the Trump administration rejecting requests from US embassies to fly the rainbow flag during Pride Month.
Announcing the stunt on Twitter, he joked the only flags allowed to fly in his town were pride flags.
“Gay Hell, Mi has everything. A library, a place to lock your love in Gay Hell, and even a WEDDING CHAPEL TO GET GAY MARRIED IN HELL!” he said.
When asked about the name of the town, which reportedly has just dozens of residents, Mr Daniels told Sky News it “literally was perfect”.
“When I found out it was for sale, I was like oh s***, I’ve gotta buy this now,” he said.
Mr Daniel, who has nearly 600,000 YouTube subscribers, is openly gay and got engaged to his partner, Sam, in January.
The prankster became the temporary mayor of Hell in 2017 and ‘outlawed’ heterosexuality, saying he would establish “new vetting measures to keep radical heterosexuals out of our town”.
He wrote on Twitter: “If Donald Trump, a REALITY STAR can be our president there’s no reason why I can’t be a politician.”
Mr Daniel told Sky News he was “trying to find the easiest political office to hold” and found he was able to become the mayor of a town, as long as it was small.
“I contacted like 50 towns and all of them were like ‘no, you’re not allowed to be our mayor’ and then I hit up Hell and they were like ‘absolutely’,” he said.
The 2017 stunt was intended to mock President Trump’s treatment of Muslims.
Mr Daniel’s latest prank has been trending on Twitter and a number of users have posted photos standing next to the town’s sign.
One couple posted a photo of themselves next to the town’s love locks and wrote: “Our gay love and legal marriage is forever cemented on the gates of Hell. It’s what @s8n would want.”
Makeup expert and YouTuber Jeffree Star said he would be keen to own a home in Gay Hell.
He tweeted: “As a part time Michigan resident myself, I’d love to buy some land in Gay Hell! A cute pink mansion on a hill, nothing too fancy?”
Awsten Knight, the singer of rock band Waterparks, also tweeted: “I WANNA GO TO GAY HELL WITH MY FRIENDS”.
Mr Daniel said the reaction has been mostly positive and most people understand that it is “just a fun joke”.
This is not the first time Elijah Daniel has pranked the US leader.
In 2016, he wrote a 10-page erotic novella featuring the president titled Trump Temptation: The Billionaire & The Bellboy.
Asked if President Trump was banned from his town, Mr Daniel said he was “not sure” he could legally do that, but had “definitely tweeted it”.