{"id":1375,"date":"2026-09-28T00:54:32","date_gmt":"2026-09-28T04:54:32","guid":{"rendered":"https:\/\/arvcalc.com\/blog\/?p=1375"},"modified":"2026-09-28T00:54:32","modified_gmt":"2026-09-28T04:54:32","slug":"michigan-cap-rate","status":"publish","type":"post","link":"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/","title":{"rendered":"Michigan Cap Rate by City: Real Data + Deals (2026)"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>Michigan cap rates<\/strong> average 5.5\u20137.5% across the state \u2014 well above the 4\u20135% national baseline \u2014 but that headline number hides a wild spread. Detroit can show cap rates above 9% on paper, then the tax bill arrives and it drops to 6%. Ann Arbor runs 4\u20135% and that&#8217;s actually fair given demand. Eight cities, eight completely different risk\/return profiles. Use the <a href=\"\/states\/michigan\/cap-rate-calculator\">Michigan cap rate calculator<\/a> to run any of these deals with Michigan-specific property tax, insurance, and vacancy defaults pre-loaded.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Michigan_Cap_Rates_in_2026_%E2%80%94_What_the_Data_Shows\" >Michigan Cap Rates in 2026 \u2014 What the Data Shows<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Cap_Rates_by_City_%E2%80%94_8_Michigan_Metros\" >Cap Rates by City \u2014 8 Michigan Metros<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#How_to_Calculate_Cap_Rate_on_Michigan_Properties\" >How to Calculate Cap Rate on Michigan Properties<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Worked_Example_%E2%80%94_Grand_Rapids_SFR\" >Worked Example \u2014 Grand Rapids SFR<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Worked_Example_%E2%80%94_Detroit_Duplex\" >Worked Example \u2014 Detroit Duplex<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Whats_a_Good_Cap_Rate_in_Michigan\" >What&#8217;s a Good Cap Rate in Michigan?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Michigan_Cap_Rate_Traps\" >Michigan Cap Rate Traps<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Michigan_vs_Other_Midwest_States\" >Michigan vs Other Midwest States<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#FAQ_Michigan_Cap_Rates\" >FAQ: Michigan Cap Rates<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#What_is_the_average_cap_rate_in_Michigan\" >What is the average cap rate in Michigan?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#What_is_a_good_cap_rate_in_Detroit\" >What is a good cap rate in Detroit?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Is_Grand_Rapids_better_than_Detroit_for_cap_rate_investing\" >Is Grand Rapids better than Detroit for cap rate investing?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#How_does_Michigan_property_tax_affect_cap_rate\" >How does Michigan property tax affect cap rate?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Should_I_invest_in_Flint_for_high_cap_rates\" >Should I invest in Flint for high cap rates?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/arvcalc.com\/blog\/michigan-cap-rate\/#Run_Your_Michigan_Deal_Now\" >Run Your Michigan Deal Now<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Michigan_Cap_Rates_in_2026_%E2%80%94_What_the_Data_Shows\"><\/span>Michigan Cap Rates in 2026 \u2014 What the Data Shows<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Michigan&#8217;s statewide average cap rate sits at roughly <strong>6.2%<\/strong> for stabilized single-family rentals \u2014 about 150 basis points above the national average per <a href=\"https:\/\/www.mirealtors.com\" target=\"_blank\" rel=\"noopener\">Michigan Realtors<\/a> data for Q2 2026. That gap exists for three reasons: affordable purchase prices relative to rent, a diversified industrial economy that supports working-class tenants, and generally higher property taxes that other investors price in before they buy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Nationally, cap rates on residential investment property cluster around 4.5\u20135.5% in most coastal and Sun Belt markets. Michigan&#8217;s 6.2% average looks great until you compare it to Indiana at 6.8% or Ohio at 6.0% \u2014 the Midwest as a whole runs hotter than the national average. Michigan&#8217;s edge over Indiana is stricter landlord protections (a risk factor, not a dealbreaker), and its edge over Ohio depends heavily on which city you&#8217;re in.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The city-to-city spread within Michigan is what really matters. Detroit&#8217;s property tax rate runs <strong>2.8%<\/strong> of assessed value for non-homestead (investor-owned) properties. Grand Rapids sits at <strong>1.2%<\/strong>. Ann Arbor is around <strong>1.5%<\/strong>. Flint varies but typically lands between 2.0\u20132.4%. That tax gap alone can swing a deal from a 7% cap rate to a 5% cap rate on the same gross rent \u2014 sometimes the difference between cash-flowing and breaking even. Every single analysis needs city-specific tax rates, not a state average.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cap_Rates_by_City_%E2%80%94_8_Michigan_Metros\"><\/span>Cap Rates by City \u2014 8 Michigan Metros<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The table below uses realistic 2026 market data. Cap rates are calculated as NOI \u00f7 purchase price. NOI accounts for vacancy, property tax, insurance, maintenance (8% of gross), and property management (10% of collected rent). Mortgage is excluded \u2014 cap rate is always an unlevered return metric.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th>Metro<\/th><th>Median Price<\/th><th>Median Rent<\/th><th>Cap Rate<\/th><th>Property Tax<\/th><th>Vacancy<\/th><th>Verdict<\/th><\/tr><\/thead><tbody>\n<tr><td><strong>Detroit<\/strong><\/td><td>$165,000<\/td><td>$1,100\/mo<\/td><td><strong>6.5\u20138.5%<\/strong><\/td><td>2.8%<\/td><td>8%<\/td><td>High yield, high complexity<\/td><\/tr>\n<tr><td><strong>Grand Rapids<\/strong><\/td><td>$245,000<\/td><td>$1,650\/mo<\/td><td><strong>5.5\u20136.5%<\/strong><\/td><td>1.2%<\/td><td>4.5%<\/td><td>Best risk-adjusted returns<\/td><\/tr>\n<tr><td><strong>Ann Arbor<\/strong><\/td><td>$385,000<\/td><td>$1,900\/mo<\/td><td><strong>4.0\u20135.0%<\/strong><\/td><td>1.5%<\/td><td>3.5%<\/td><td>Appreciation play, low cash flow<\/td><\/tr>\n<tr><td><strong>Lansing<\/strong><\/td><td>$195,000<\/td><td>$1,200\/mo<\/td><td><strong>5.5\u20136.5%<\/strong><\/td><td>1.8%<\/td><td>5.5%<\/td><td>Solid, government-anchored<\/td><\/tr>\n<tr><td><strong>Kalamazoo<\/strong><\/td><td>$220,000<\/td><td>$1,350\/mo<\/td><td><strong>5.0\u20136.5%<\/strong><\/td><td>1.6%<\/td><td>5.0%<\/td><td>College town, stable demand<\/td><\/tr>\n<tr><td><strong>Flint<\/strong><\/td><td>$80,000<\/td><td>$750\/mo<\/td><td><strong>7.0\u20139.5%<\/strong><\/td><td>2.2%<\/td><td>12%<\/td><td>High risk, buyer beware<\/td><\/tr>\n<tr><td><strong>Warren\/Sterling Hts<\/strong><\/td><td>$230,000<\/td><td>$1,500\/mo<\/td><td><strong>5.5\u20137.0%<\/strong><\/td><td>1.9%<\/td><td>5.0%<\/td><td>Strong suburban demand<\/td><\/tr>\n<tr><td><strong>Traverse City<\/strong><\/td><td>$395,000<\/td><td>$1,750\/mo<\/td><td><strong>3.5\u20135.0%<\/strong><\/td><td>1.3%<\/td><td>8\u201315%*<\/td><td>STR market, seasonal LTR risk<\/td><\/tr>\n<\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">*Traverse City vacancy depends entirely on STR vs. long-term rental strategy. Long-term rentals face 8\u201312% seasonal vacancy. Short-term rentals can outperform but carry licensing and regulatory risk.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Quick NOI math for each city using median numbers above:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Detroit ($165K, $1,100\/mo):<\/strong> Gross $13,200 \u2192 8% vacancy ($1,056) \u2192 $12,144 effective \u2192 expenses (~$5,820 tax + insurance + mgmt + maint) \u2192 NOI ~$6,324 \u2192 cap rate 3.8% on paper, but cheaper properties in distressed neighborhoods push the rent-to-price ratio up significantly. Sub-$100K buys in specific ZIP codes routinely show 7%+.<\/li>\n<li><strong>Grand Rapids ($245K, $1,650\/mo):<\/strong> Gross $19,800 \u2192 4.5% vacancy ($891) \u2192 $18,909 effective \u2192 expenses (~$7,780) \u2192 NOI ~$11,129 \u2192 cap rate 4.5%. Well-run properties in East GR and Kentwood push 5.5\u20136.5%.<\/li>\n<li><strong>Flint ($80K, $750\/mo):<\/strong> Gross $9,000 \u2192 12% vacancy ($1,080) \u2192 $7,920 effective \u2192 expenses (~$4,100) \u2192 NOI ~$3,820 \u2192 cap rate 4.8% even at these prices. High vacancy crushes what looks like a great rent-to-price ratio.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Run your specific numbers in the <a href=\"\/noi-calculator\">NOI calculator<\/a> \u2014 it shows the exact line-item breakdown before you ever touch the cap rate figure.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Calculate_Cap_Rate_on_Michigan_Properties\"><\/span>How to Calculate Cap Rate on Michigan Properties<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The formula hasn&#8217;t changed:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Cap Rate = NOI \u00f7 Property Value<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Where NOI = all income minus all operating expenses. The tricky part is getting the expense stack right for Michigan.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What goes into NOI:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Gross rent<\/strong> \u2014 actual collected rent at full occupancy<\/li>\n<li><strong>Minus vacancy<\/strong> \u2014 Michigan statewide average is around 6.5%, but use metro-specific rates<\/li>\n<li><strong>Minus property tax<\/strong> \u2014 this is where Michigan bites. Michigan taxes rental properties at the non-homestead rate, which is higher than the principal residence exemption rate most homeowners pay. Detroit&#8217;s 2.8% non-homestead rate is not a typo.<\/li>\n<li><strong>Minus insurance<\/strong> \u2014 Detroit runs $2,200\u2013$2,800\/year. Outstate Michigan (Grand Rapids, Lansing, Kalamazoo) runs $1,100\u2013$1,400\/year. Traverse City is middle ground around $1,500\u2013$1,800.<\/li>\n<li><strong>Minus property management<\/strong> \u2014 8\u201310% of collected rent, typically<\/li>\n<li><strong>Minus maintenance and CapEx reserve<\/strong> \u2014 8\u201310% of gross rent is a reasonable budget for Michigan&#8217;s older housing stock<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What does NOT go into NOI:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Mortgage payments<\/strong> \u2014 principal and interest are financing costs, not operating expenses<\/li>\n<li><strong>Depreciation<\/strong> \u2014 a tax accounting concept, not a cash expense<\/li>\n<li><strong>City income tax<\/strong> \u2014 technically an investor-level expense, not a property-level expense; cap rate is pre-income tax<\/li>\n<li><strong>Acquisition costs<\/strong> \u2014 closing costs, inspection, appraisal; use <a href=\"\/states\/michigan\/closing-costs-calculator\">Michigan closing costs calculator<\/a> to track these separately<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Michigan&#8217;s non-homestead property tax is a calculation trap that catches out-of-state investors every time. When a property sells, it may have been owner-occupied under the principal residence exemption. Zillow and public records often show the previous owner&#8217;s tax bill. The moment you take title as an investor, the full non-homestead rate kicks in \u2014 and in Detroit, that difference can be $3,000\u2013$5,000\/year on a $165K property. Always calculate taxes at the non-homestead rate per the <a href=\"https:\/\/www.michigan.gov\/treasury\" target=\"_blank\" rel=\"noopener\">Michigan Department of Treasury<\/a> tables before running any cap rate analysis.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For a complete Michigan deal analysis including financing, cash-on-cash, and DSCR, use the <a href=\"\/states\/michigan\/rental-property-calculator\">Michigan rental property calculator<\/a>. For cap rate specifically \u2014 including reverse-solve modes where you enter your target cap rate and it tells you the maximum purchase price \u2014 use the <a href=\"\/states\/michigan\/cap-rate-calculator\">Michigan cap rate calculator<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Worked_Example_%E2%80%94_Grand_Rapids_SFR\"><\/span>Worked Example \u2014 Grand Rapids SFR<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This is a real deal structure based on current Grand Rapids east-side market conditions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Property:<\/strong> 3BR\/1BA SFR, East Grand Rapids adjacent<br><strong>Purchase price:<\/strong> $245,000<br><strong>Gross monthly rent:<\/strong> $1,650<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>NOI calculation:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Gross annual rent: $1,650 \u00d7 12 = <strong>$19,800<\/strong><\/li>\n<li>Vacancy (4.5%): \u2212$891<\/li>\n<li>Effective gross income: <strong>$18,909<\/strong><\/li>\n<li>Property tax (1.2% non-homestead \u00d7 $245,000): \u2212$2,940<\/li>\n<li>Insurance (Grand Rapids outstate rate): \u2212$1,250<\/li>\n<li>Property management (10% of $18,909): \u2212$1,891<\/li>\n<li>Maintenance\/CapEx reserve (8% of gross): \u2212$1,584<\/li>\n<li><strong>NOI: $11,244<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Cap Rate = $11,244 \u00f7 $245,000 = <em>4.59%<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That&#8217;s honest. Not the 6.5% you might see on a wholesaler&#8217;s proforma. Why the gap? Most proformas understate vacancy, skip a maintenance reserve, and use the previous owner&#8217;s homestead tax rate. Add those back in and you&#8217;re at 4.6%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Is 4.6% good? For Grand Rapids in 2026 \u2014 yes, actually. The national SFR cap rate average sits around 4.8% per NCREIF, and Grand Rapids has stronger rent growth (4.2% YoY) and tighter vacancy than most comparable markets. This isn&#8217;t a cash flow machine, but it&#8217;s a compounding machine: low vacancy, rising rents, and a city with actual job growth (medical device manufacturing, healthcare, tech).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At 7% mortgage rate on 20% down ($49,000 down, $196,000 loan), monthly P&amp;I is about $1,304. Monthly NOI is $937. You&#8217;re cash-flow negative by roughly $367\/month. This pencils if rent grows 3\u20134%\/year or if you can push rents above $1,750 on a renovation. Run the scenarios in the <a href=\"\/states\/michigan\/rental-property-calculator\">Michigan rental property calculator<\/a> \u2014 it shows exactly when the deal turns cash-flow positive and what your year-10 unlevered return looks like.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Want to check if a DSCR loan works for this deal? The <a href=\"\/states\/michigan\/dscr-calculator\">Michigan DSCR calculator<\/a> will show you whether the NOI supports the debt at current rates.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Worked_Example_%E2%80%94_Detroit_Duplex\"><\/span>Worked Example \u2014 Detroit Duplex<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Detroit is where investors come looking for double-digit cap rates and leave with a tax bill. Here&#8217;s what actually happens when you run the full numbers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Property:<\/strong> Duplex, near Detroit Medical Center corridor<br><strong>Purchase price:<\/strong> $165,000<br><strong>Unit 1 rent:<\/strong> $950\/month<br><strong>Unit 2 rent:<\/strong> $900\/month<br><strong>Gross monthly rent:<\/strong> $1,850<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>NOI calculation:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Gross annual rent: $1,850 \u00d7 12 = <strong>$22,200<\/strong><\/li>\n<li>Vacancy (8%): \u2212$1,776<\/li>\n<li>Effective gross income: <strong>$20,424<\/strong><\/li>\n<li>Property tax (2.8% non-homestead \u00d7 $165,000): \u2212$4,620<\/li>\n<li>Insurance (Detroit premium rate): \u2212$2,400<\/li>\n<li>Property management (10% of $20,424): \u2212$2,042<\/li>\n<li>Maintenance\/CapEx reserve (8% of gross): \u2212$1,776<\/li>\n<li><strong>NOI: $9,586<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Cap Rate = $9,586 \u00f7 $165,000 = <em>5.81%<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Not 9%. Not 12%. 5.81%. Detroit&#8217;s tax and insurance load ate roughly $7,000\/year of would-be NOI. That&#8217;s the Detroit math that doesn&#8217;t show up in the headline cap rate you see on BiggerPockets posts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Add Detroit&#8217;s 2.4% city income tax on rental income and your after-tax return drops further \u2014 though again, cap rate itself is pre-income-tax. For actual cash flow at current financing rates (7% on 20% down = $132,000 loan, ~$879\/month P&amp;I), monthly NOI is $799. Monthly cash flow after debt service: \u2212$80. Nearly break-even.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Detroit thesis isn&#8217;t &#8220;buy and cash flow.&#8221; It&#8217;s &#8220;buy distressed, force value, rent both units, refinance, repeat.&#8221; For that strategy, Detroit still works \u2014 but only if you&#8217;re running the <a href=\"\/states\/michigan\/brrrr-calculator\">Michigan BRRRR calculator<\/a> from the start and accounting for realistic after-rehab rents, real tax rates, and Detroit&#8217;s insurance reality. If you&#8217;re buying turn-key duplex expecting a clean 8% cap, do the full math first using the <a href=\"\/cap-rate-calculator\">cap rate calculator<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Detroit&#8217;s silver lining: rent growth. The DMC\/Midtown corridor has seen 6\u20138% annual rent growth since 2023. If Unit 1 hits $1,100 and Unit 2 hits $1,050 within two years (both realistic for renovated units near DMC), your NOI jumps to ~$12,300 and your cap rate on original purchase price hits 7.5%. That&#8217;s where Detroit money is made \u2014 not on day one numbers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Whats_a_Good_Cap_Rate_in_Michigan\"><\/span>What&#8217;s a Good Cap Rate in Michigan?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">It depends on what you&#8217;re buying the property to do.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Pure cash flow strategy (7%+ target):<\/strong> You need Detroit, Flint, or specific neighborhoods in Warren or Lansing. These markets trade at high caps because they carry higher vacancy, maintenance, and management risk. The 7%+ cap is the risk premium. If you can manage these properties well \u2014 or find a PM who specializes in them \u2014 the returns are there. The <a href=\"\/states\/michigan\/rental-property-calculator\">Michigan rental property calculator<\/a> helps stress-test these deals at different vacancy scenarios.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Appreciation + cash flow balance (5.5\u20136.5% target):<\/strong> Grand Rapids, Warren\/Sterling Heights, and Lansing all sit in this range. You&#8217;re not getting rich on cash flow, but you&#8217;re not losing money either. Rent growth, population stability, and moderate appreciation make these compounding plays over a 5\u20137 year hold.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Appreciation play (4\u20135% cap rate):<\/strong> Ann Arbor and Traverse City. You&#8217;re accepting compressed cash flow because the underlying asset appreciates. Ann Arbor has one of the most stable rental demand profiles in the Midwest \u2014 University of Michigan creates constant tenant demand and limits oversupply risk. A 4.2% cap rate in Ann Arbor isn&#8217;t a mistake. It&#8217;s the price of certainty.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">By city, here&#8217;s what&#8217;s realistic in 2026:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Detroit:<\/strong> 6\u20138% cap rate is achievable on the right deal. Below 5% means you overpaid or the proforma is optimistic. Above 9% means you&#8217;re in a neighborhood where the vacancy or maintenance risk will close that gap fast.<\/li>\n<li><strong>Grand Rapids:<\/strong> 4.5\u20135.5% is honest for SFRs. Duplexes can push 5.5\u20136.5%.<\/li>\n<li><strong>Ann Arbor:<\/strong> 4\u20135% is the market. Anyone quoting 6% in Ann Arbor is skipping a cost line.<\/li>\n<li><strong>Lansing:<\/strong> 5.5\u20136.5% is solid and sustainable. State government employment base keeps vacancy low.<\/li>\n<li><strong>Kalamazoo:<\/strong> 5\u20136.5% depending on whether you&#8217;re near WMU or in a non-student neighborhood.<\/li>\n<li><strong>Flint:<\/strong> 6\u20138% is possible. The 12% vacancy rate is the ceiling. See the next section.<\/li>\n<li><strong>Warren\/Sterling Heights:<\/strong> 5.5\u20137% on the right deal. Macomb County property tax is manageable at 1.9%.<\/li>\n<li><strong>Traverse City:<\/strong> 3.5\u20135% for long-term rentals. STR can outperform significantly but requires a separate analysis in the <a href=\"\/states\/michigan\/rental-property-calculator\">Michigan rental property calculator<\/a>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Michigan_Cap_Rate_Traps\"><\/span>Michigan Cap Rate Traps<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Five things that will make your Michigan cap rate look better on paper than it performs in reality:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>1. Non-homestead property tax rate.<\/strong> This is the number one mistake out-of-state investors make in Michigan. The current owner may be paying taxes under the Principal Residence Exemption (PRE) \u2014 a lower rate available only to owner-occupants. Once you close, your rate flips to the full non-homestead millage. In Detroit, that means your effective tax rate might jump from what the listing shows (~1.8%) to the actual investor rate (2.8%). On a $165K property, that&#8217;s $1,650\/year difference. Always calculate at the non-homestead rate. Pull the exact millage from the <a href=\"https:\/\/www.michigan.gov\/treasury\" target=\"_blank\" rel=\"noopener\">Michigan Department of Treasury<\/a> by county before you underwrite.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>2. City income tax in Michigan cities.<\/strong> Detroit charges a 2.4% income tax on rental income from Detroit properties \u2014 whether you live there or not. Grand Rapids charges 1.5% for non-residents. Lansing charges 1.0%. These are investor-level expenses that don&#8217;t appear in the cap rate calculation (which is pre-income-tax), but they affect your actual cash-on-cash return significantly. If you&#8217;re comparing a Detroit deal against an Ohio deal, the city income tax gap matters. Run both through the <a href=\"\/states\/michigan\/rental-property-calculator\">Michigan rental property calculator<\/a> vs. the comparable tool for Ohio to see the after-tax difference.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>3. Detroit insurance premiums.<\/strong> Standard rental dwelling policies in Detroit run $2,200\u2013$2,800\/year on a median-priced property. The same property in Grand Rapids or Kalamazoo would cost $1,100\u2013$1,400. That $1,400 annual gap is about 0.85 percentage points of cap rate on a $165K property. When you see a Detroit deal on a wholesaler&#8217;s spreadsheet with $1,200 insurance, the proforma is wrong. Detroit&#8217;s crime rate and claim history push premiums up. Get an actual quote before you close \u2014 check the <a href=\"\/blog\/rental-property-insurance-cost-by-state\/\">rental property insurance cost by state guide<\/a> for baseline Michigan numbers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>4. Seasonal vacancy in northern Michigan.<\/strong> Traverse City is a tourism economy. A 3-bed SFR that rents long-term runs 8\u201312% vacancy because winter turnover is real \u2014 many tenants leave after summer employment ends. If you&#8217;re running a long-term rental in a tourist-driven northern Michigan market, use vacancy in the 10\u201312% range, not the state average. If you pivot to STR, calculate that separately \u2014 the <a href=\"\/states\/michigan\/rental-property-calculator\">Michigan rental property calculator<\/a> has an Airbnb income mode. Just don&#8217;t mix LTR vacancy assumptions with a property that functions as an STR.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>5. Flint&#8217;s 12% vacancy rate eating cap rates alive.<\/strong> Flint looks incredible on a price-to-rent ratio: $80K property, $750\/month rent is a 1.06% monthly rent-to-price ratio \u2014 above the 1% rule threshold. But run the vacancy. At 12%, you lose 1.44 months of rent per year. That&#8217;s $1,080 gone before you pay a single expense. Flint&#8217;s water infrastructure history created a population decline that structural demand never recovered from per <a href=\"https:\/\/www.census.gov\/programs-surveys\/acs\" target=\"_blank\" rel=\"noopener\">Census ACS data<\/a>. Paper cap rates of 9\u201312% are common. Actual stabilized cap rates after realistic vacancy, maintenance on aging housing stock, and higher insurance are often 5\u20137% \u2014 similar to better markets with none of the risk. Don&#8217;t chase cap rates in Flint without underwriting Flint specifically: real vacancy, real insurance, real condition of the housing stock in the specific neighborhood.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Michigan_vs_Other_Midwest_States\"><\/span>Michigan vs Other Midwest States<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">How Michigan stacks up against comparable Midwest investment markets:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th>State<\/th><th>Avg Cap Rate<\/th><th>Effective Property Tax<\/th><th>State Income Tax<\/th><th>Avg Insurance<\/th><th>Landlord-Friendliness<\/th><\/tr><\/thead><tbody>\n<tr><td><strong>Michigan<\/strong><\/td><td><strong>5.5\u20137.0%<\/strong><\/td><td>1.2\u20132.8%<\/td><td>4.25% flat<\/td><td>$1,200\u2013$2,800<\/td><td>Moderate<\/td><\/tr>\n<tr><td>Ohio<\/td><td>5.0\u20137.0%<\/td><td>1.6\u20131.9%<\/td><td>2.75% flat<\/td><td>$2,100<\/td><td>Moderate-Friendly<\/td><\/tr>\n<tr><td>Indiana<\/td><td>5.5\u20137.5%<\/td><td>0.8\u20131.1%<\/td><td>3.05% flat<\/td><td>$1,600<\/td><td>Very Friendly<\/td><\/tr>\n<tr><td>Wisconsin<\/td><td>4.5\u20136.0%<\/td><td>1.7\u20132.1%<\/td><td>5.3\u20137.65%<\/td><td>$1,800<\/td><td>Moderate<\/td><\/tr>\n<\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Michigan&#8217;s headline cap rates are competitive, but Indiana actually beats it on two key expense lines: lower property tax (some Indiana counties run below 1%) and slightly lower insurance. Indiana&#8217;s landlord law is also more favorable for expedited eviction proceedings \u2014 a real operational consideration.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ohio competes closely with Michigan. Columbus vs. Grand Rapids is necessaryly a coin flip at 5% caps with different growth stories. Cleveland vs. Detroit is the more interesting comparison: similar price points, similar cap rates, different risk profiles. Detroit&#8217;s higher insurance and city income tax make it slightly less favorable than Cleveland when you line up identical deals. Ohio&#8217;s state income tax rate (2.75%) is lower than Michigan&#8217;s (4.25%), which matters on a $15,000 NOI \u2014 that&#8217;s a $225\/year difference.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Wisconsin&#8217;s cap rates are compressed by higher entry prices and high property taxes in major metros. Milwaukee gets the Cleveland\/Detroit comparison sometimes, but Wisconsin&#8217;s progressive income tax (top bracket 7.65%) meaningfully erodes cash-on-cash for higher-income investors. Michigan at 4.25% flat is simpler and cheaper for most investor tax profiles.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For a full multi-state comparison, the <a href=\"\/blog\/cap-rate-by-state-best-markets-2026\/\">cap rate by state guide<\/a> covers 20+ markets with consistent methodology. If you&#8217;re actively comparing Michigan to Indiana or Ohio deals, run both through the <a href=\"\/cap-rate-calculator\">cap rate calculator<\/a> using state-specific defaults.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQ_Michigan_Cap_Rates\"><\/span>FAQ: Michigan Cap Rates<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_average_cap_rate_in_Michigan\"><\/span>What is the average cap rate in Michigan?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Michigan&#8217;s statewide average cap rate for stabilized residential investment properties runs approximately <strong>6.2%<\/strong> in 2026, based on Q2 market data. That figure covers a wide range \u2014 from 3.5\u20135% in high-appreciation markets like Ann Arbor and Traverse City, to 7\u20139% in Detroit, Flint, and some Warren neighborhoods. The statewide average is useful for benchmarking but not for underwriting a specific deal. Use the <a href=\"\/states\/michigan\/cap-rate-calculator\">Michigan cap rate calculator<\/a> with the actual purchase price, rent, and city-specific tax rate for any deal you&#8217;re seriously analyzing.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_good_cap_rate_in_Detroit\"><\/span>What is a good cap rate in Detroit?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Given Detroit&#8217;s expense profile \u2014 2.8% non-homestead property tax, $2,200\u2013$2,800 insurance, 8% vacancy \u2014 a <strong>6.5\u20138%<\/strong> cap rate represents a genuinely good deal. Below 5.5% in Detroit usually means the proforma is using unrealistic expense assumptions. Above 9% usually means the property is in a high-vacancy, high-crime neighborhood where the theoretical cap rate will be eroded by actual performance. Aim for 6.5\u20138% with a full expense stack, and verify with the <a href=\"\/states\/michigan\/cap-rate-calculator\">Michigan cap rate calculator<\/a> using Detroit-specific defaults.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_Grand_Rapids_better_than_Detroit_for_cap_rate_investing\"><\/span>Is Grand Rapids better than Detroit for cap rate investing?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">They serve different strategies. Grand Rapids has lower cap rates (4.5\u20135.5% on SFRs) but also lower risk: 4.5% vacancy vs. Detroit&#8217;s 8%, $1,250 insurance vs. $2,400, 1.2% property tax vs. 2.8%. Detroit has higher potential cap rates (6.5\u20138%) but higher operational complexity: city income tax, higher insurance, vacancy risk, and a management-intensive environment. If you&#8217;re a local operator or working with a Detroit-specialist PM, Detroit can outperform. If you&#8217;re out-of-state with a passive strategy, Grand Rapids is the more predictable result. Check the <a href=\"\/blog\/michigan-rental-property-investment\/\">Michigan rental property investment guide<\/a> for a deeper breakdown of both markets.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_does_Michigan_property_tax_affect_cap_rate\"><\/span>How does Michigan property tax affect cap rate?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Significantly. Michigan&#8217;s non-homestead property tax applies to all investor-owned properties at rates that vary from roughly 1.2% (Grand Rapids) to 2.8% (Detroit). On a $200,000 property, that difference is $3,200\/year \u2014 about 1.6 percentage points of cap rate. Always underwrite using the non-homestead millage rate for the specific county and city, not the statewide average and never the previous owner&#8217;s homestead tax bill. The <a href=\"\/states\/michigan\/cap-rate-calculator\">Michigan cap rate calculator<\/a> lets you input the exact millage rate for your property&#8217;s location. Full millage tables are published by the <a href=\"https:\/\/www.michigan.gov\/treasury\" target=\"_blank\" rel=\"noopener\">Michigan Department of Treasury<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Should_I_invest_in_Flint_for_high_cap_rates\"><\/span>Should I invest in Flint for high cap rates?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Flint requires serious due diligence before the cap rate number means anything. The 12% vacancy rate is structural \u2014 population decline driven by deindustrialization and infrastructure history means rental demand won&#8217;t recover to normal levels across the city. In specific Flint neighborhoods (near McLaren hospital, some parts of the north end) there&#8217;s genuine rental demand and real cap rates of 6\u20138% do exist. But across-the-board Flint investment based on the price-to-rent ratio alone is a trap. If you&#8217;re pursuing Flint, underwrite each property with Flint-specific vacancy (10\u201314%), get actual insurance quotes, and stress-test at 15% vacancy in the <a href=\"\/states\/michigan\/rental-property-calculator\">Michigan rental property calculator<\/a> before you commit. See also: <a href=\"\/blog\/good-cap-rate-rental-property\/\">what&#8217;s a good cap rate for rental property<\/a> \u2014 context matters as much as the number.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Run_Your_Michigan_Deal_Now\"><\/span>Run Your Michigan Deal Now<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Michigan has some of the best risk-adjusted cap rates in the Midwest when you&#8217;re in the right city with the right numbers. The state average of 6.2% is real \u2014 but so are the Detroit tax bill and Flint&#8217;s vacancy. Every deal is its own math problem.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Tools to use for Michigan analysis:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"\/states\/michigan\/cap-rate-calculator\">Michigan Cap Rate Calculator<\/a> \u2014 Michigan-specific tax and vacancy defaults; three calculation modes including reverse-solve<\/li>\n<li><a href=\"\/states\/michigan\/rental-property-calculator\">Michigan Rental Property Calculator<\/a> \u2014 full cash flow, NOI, CoC, DSCR in one tool<\/li>\n<li><a href=\"\/states\/michigan\/dscr-calculator\">Michigan DSCR Calculator<\/a> \u2014 verify loan qualification with Michigan-specific insurance and tax defaults<\/li>\n<li><a href=\"\/states\/michigan\/closing-costs-calculator\">Michigan Closing Costs Calculator<\/a> \u2014 Michigan transfer tax, recording fees, title insurance estimates<\/li>\n<li><a href=\"\/states\/michigan\/brrrr-calculator\">Michigan BRRRR Calculator<\/a> \u2014 for Detroit and distressed-market value-add strategies<\/li>\n<li><a href=\"\/cap-rate-calculator\">Cap Rate Calculator<\/a> \u2014 generic calculator for cross-state comparisons<\/li>\n<li><a href=\"\/noi-calculator\">NOI Calculator<\/a> \u2014 isolate operating performance before financing<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">For context on how Michigan fits into the national picture, read the <a href=\"\/blog\/cap-rate-by-state-best-markets-2026\/\">cap rate by state guide<\/a>, the <a href=\"\/blog\/michigan-rental-property-investment\/\">Michigan rental property investment guide<\/a>, and the <a href=\"\/blog\/good-cap-rate-rental-property\/\">good cap rate guide<\/a>. Insurance expense is often the overlooked variable \u2014 the <a href=\"\/blog\/rental-property-insurance-cost-by-state\/\">rental property insurance cost by state breakdown<\/a> shows exactly how much Michigan varies from other markets.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Michigan cap rates average 6.2% statewide \u2014 from 4% in Ann Arbor to 8%+ in Detroit. Real NOI math for 8 cities before you buy.<\/p>\n","protected":false},"author":1,"featured_media":1376,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[],"class_list":["post-1375","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-guides"],"_links":{"self":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/comments?post=1375"}],"version-history":[{"count":1,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1375\/revisions"}],"predecessor-version":[{"id":1377,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1375\/revisions\/1377"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/media\/1376"}],"wp:attachment":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/media?parent=1375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/categories?post=1375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/tags?post=1375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}