New Investor/Need Insight

Detroit, Michigan
Real Estate Deal Analysis & Advice
2dFollow

New Investor/Need Insight

Zachary Esparza
Investor · Grand Rapids, MI · Member since 2026 · 9 posts · 1 vote

Hello there, my name is Zachary. I'll keep this short and sweet. Looking to invest in Section8 housing in Detroit and surrounding areas. However, because of the insanely high millage rate for non-homestead property taxes, I can not justify purchasing a property and paying 350-600 in taxes monthly.

Has anyone else run into this issue? What are current investors doing there? It makes me wonder how anyone at all could possibly invest in Detroit right now. Several searches online and videos all say Detroit is a top spot for rental investing. With these numbers that I'm seeing, I need someone to prove to me that it'sworth it.

Thanks in advance!! Any advice is greatly appreciated.

0Reply
638 views

Most Popular Reply

Rickey Shneyder
Lender · Milwaukee, WI · Member since 2026 · 15 posts · 4 votes
2d

@Zachary Esparza You're right to look at taxes first. In Detroit they're usually the line item that decides the deal, and a lot of the "top market" videos skip it.

A few things that matter:

  • Don't underwrite off the seller's tax bill. In Michigan, taxable value is capped while someone owns a property and "uncaps" the year after a sale, so your bill can jump to roughly half the assessor's market value times the non-homestead millage. Look up each address's assessment and estimate the post-sale bill yourself.

  • The taxes are already baked into prices. Low Detroit purchase prices partly reflect that tax load. The real question isn't whether $350–600 a month is high, it's whether the price is low enough that the rent covers it with room left over. Work backward from rent to your maximum price.

  • Lenders count it too. A DSCR lender divides rent by principal, interest, taxes, insurance and any HOA, so heavy taxes shrink the loan you can get. Expect more cash down or a lower price.

  • Use the voucher payment standard and utility allowance for each specific ZIP code, not a citywide average, and budget for inspection repairs.

  • Assessments can be appealed. Detroit has a review window early each year, and a property assessed well above what it would sell for is worth contesting.

Run five real listings this way and you'll see quickly which neighborhoods still work.

1Reply
See this reply in the discussion

18 Replies

Jump to latestLatest
  • Rickey Shneyder
    Lender · Milwaukee, WI · Member since 2026 · 15 posts · 4 votes
    2d

    @Zachary Esparza You're right to look at taxes first. In Detroit they're usually the line item that decides the deal, and a lot of the "top market" videos skip it.

    A few things that matter:

    • Don't underwrite off the seller's tax bill. In Michigan, taxable value is capped while someone owns a property and "uncaps" the year after a sale, so your bill can jump to roughly half the assessor's market value times the non-homestead millage. Look up each address's assessment and estimate the post-sale bill yourself.

    • The taxes are already baked into prices. Low Detroit purchase prices partly reflect that tax load. The real question isn't whether $350–600 a month is high, it's whether the price is low enough that the rent covers it with room left over. Work backward from rent to your maximum price.

    • Lenders count it too. A DSCR lender divides rent by principal, interest, taxes, insurance and any HOA, so heavy taxes shrink the loan you can get. Expect more cash down or a lower price.

    • Use the voucher payment standard and utility allowance for each specific ZIP code, not a citywide average, and budget for inspection repairs.

    • Assessments can be appealed. Detroit has a review window early each year, and a property assessed well above what it would sell for is worth contesting.

    Run five real listings this way and you'll see quickly which neighborhoods still work.

    1Reply
    • Zachary Esparza
      OP
      Investor · Grand Rapids, MI · Member since 2026 · 9 posts · 1 vote
      2d

      Thanks for the reply. What ive done so far was look up millage rates for several areas and looking up properties for sale there. Using a rental property calculator, it still only estimates to cash flow $110-150ish. (Thats taking into account the vacancy rate, repairs, management fee, etc) Almost seems like it's no longer worth it. I'm sure there's deals out there. Still trying to educate myself.

      1Reply
  • Owen RosenBusiness Member
    Professional · Clinton Township, MI · Member since 2015 · 708 posts · 267 votes
    2d

    Michigan-based insurance agent here: add insurance to that stress test alongside taxes. On average, Detroit insurance is very expensive per dollar of coverage, and Section 8 narrows your options further, since many carriers don't insure subsidized housing. Be careful of cheaper, sub-standard coverage like actual cash value or basic perils policies, and ask how long a home can sit vacant between tenants before coverage gets limited. Get a real landlord (dwelling) quote on each property before you offer instead of using a calculator default. Happy to provide more assistance by DM.

    Royal Oath Insurance Group4.9211 Reviews
    WebsiteView Page
    1Reply
    • Zachary Esparza
      OP
      Investor · Grand Rapids, MI · Member since 2026 · 9 posts · 1 vote
      7h

      Hi Owen, could you DM me? I'm interested to know what current options are recommended for section 8 owners and the prices they hold. Thanks!

      0Reply
  • Anthony Smith
    Real Estate Agent · Detroit, MI · Member since 2016 · 106 posts · 54 votes
    1d

    Zachary — I work in Detroit daily, and your calculator isn't wrong, it's just using the wrong tax number. The $350-600/mo you're seeing is real, but the key thing most out-of-state buyers miss: in Michigan the taxable value uncaps the year after a sale, so you have to underwrite the tax bill the house will have AFTER you buy it, not the seller's current bill. On a cheap Detroit house that jump can be the whole cash flow.

    What I see actually working here: run the rent off the Detroit Housing Commission payment standard for that ZIP and bedroom count (not Zillow rent guesses), get a real landlord insurance quote before you offer — carriers are picky about Section 8 in Detroit and it prices higher than people expect — and then let those two fixed costs tell you the max price you can pay. The low purchase prices here exist because of the tax and insurance load; the deal works when you buy at a number that still cash flows with the uncapped taxes in it. If a house only works at the seller's old tax bill, it's not a deal, it's a trap.

    Plenty of Detroit Section 8 houses do cash flow bought that way — the discipline is all in the price you pay going in.

    1Reply
  • James JonesPro Member
    Investor · Collierville, TN 38017 · Member since 2017 · 1k+ posts · 677 votes
    1d

    Zachary, I cannot speak to Detroit's millage, but I can tell you the test I run in Memphis, because it is the same test. Start from the rent the voucher actually pays for that ZIP and bedroom count — on my 3BRs here that is $1,395 to $1,950. Then subtract the real tax bill after a sale, insurance, and everything else, and see what is left. My houses have to clear the 1% rule at purchase plus rehab, bought under $100K. If $350 to $600 a month in taxes eats the spread, the answer is not a better spreadsheet. The price has to drop until the numbers work, or you pass and let someone else own the problem.

    1Reply
    • Zachary Esparza
      OP
      Investor · Grand Rapids, MI · Member since 2026 · 9 posts · 1 vote
      1d

      Hi James, thanks for your reply. What im currently doing is using the HUDs FMR number and subtracting 10% as a worse case scenario. I don't want to be that naive thinking I'll get the exact price listed. And then I'm using an average of $1500 in home insurance. The taxable rate is what im having trouble calculating. Idk where to get an exact number from. So what i did was get the purchase price, cut it in half and then add 10,000. Times that by the non homestead mill rate divided by 1000. Which gets me usually 3500-5500 in taxes annually. My math could be completely wrong. But it's all I have to go off of at the moment.

      0Reply
    • James JonesPro Member
      Investor · Collierville, TN 38017 · Member since 2017 · 1k+ posts · 677 votes
      10h

      Zachary, good work testing the numbers instead of just trusting them. Here is how I would check yours.

      Your 10% haircut on FMR is smart. I do the same kind of test in Memphis: if the deal only works at the top rent, it was never a deal. It has to work at the lower rent too.

      On taxes, your formula - half the purchase price plus $10,000, times the mill rate - is a rough estimate, and that is fine for a first pass. But do not buy off a rough estimate. Get the tax bill after the sale from the county before you close, or price the deal so it still works if taxes come in at the high end of your $3,500-$5,500 range.

      What does the deal look like at $5,500 in taxes and 10% under FMR - does it still pass the test?

      0Reply
    • Zachary Esparza
      OP
      Investor · Grand Rapids, MI · Member since 2026 · 9 posts · 1 vote
      7h

      At 5,500 i would break even depending on the price of the home. And some cases wont cash flow. Thats why I'm having a hard time wrapping my head around the hype Detroit has for this Section 8 market.

      0Reply
  • Ryan BakerBusiness Member
    Lender · Strongsville / Cleveland, OH · Member since 2026 · 124 posts · 32 votes
    1d

    Hi Zachary, good thinking to look at property taxes before you buy. In Michigan the taxable value can reset after a sale, so underwrite using the post-purchase tax bill, and any lender will include taxes and insurance in the payment they qualify you on. Since you're new, it helps to know ahead of time what a loan will look like (down payment, reserves, DSCR versus conventional) so you can move fast on a deal. I do lending, and I'm happy to walk through the numbers on a quick call, my direct line and email are on my profile. (Drafted with AI assistance.)

    [email protected]330-548-3340
    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    12h

    Ugh, so much vanilla, borderline useless, info!

    To address your question @Zachary Esparza , yes Detroit has high nonhomestead millage rates.

    There's nothing you can do to avoid them😒

    Often though, that isn't the main reason property taxes spike after a sale.

    It's the uncapping of the Taxable Value which rises to the SEV (State Equalized Value).

    If an owner has held a property for 10+ years, the uncapping can double the property taxes.

    Even with the resulting, relatively high, nonhomestead property taxes, Detroit rentals can easily cashflow - if you know how & where to buy them.

    First tip - don't buy the prettiest houses for asking price!

    [email protected]248-209-6824
    Logical Property Management4.9462 Reviews
    WebsiteView Page
    1Reply
  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 671 posts · 283 votes
    10h

    @Zachary Esparza , your concern makes sense. Looking at this from a general investing perspective—not as a Detroit market expert—I’d want the numbers to stand on their own rather than rely on a city’s reputation as a “top rental market.” If taxes eat up the cash flow, that’s a valid reason to question the deal.

    I’d ask anyone recommending the area to share a real deal breakdown: purchase price, rent collected, taxes after purchase, insurance, financing, management, and reserves for vacancy and repairs. I’d also confirm the tax estimate and expected Section 8 rent with the appropriate local offices before relying on either. If the numbers still don’t leave a comfortable cushion, I wouldn’t force it.

    [email protected]
    WEMBO CPA532 Reviews
    WebsiteView Page
    1Reply
    • Zachary Esparza
      OP
      Investor · Grand Rapids, MI · Member since 2026 · 9 posts · 1 vote
      7h

      Thanks for the reply. That is exactly what im currently looking for. Someone to give me an example of their own deal or something close to it. Also talking to insurance agents to get a more accurate figure than the average I used thats county wide.

      0Reply
    • Drew SygitBusiness Member
      Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
      5h

      We can show numbers...

      [email protected]248-209-6824
      Logical Property Management4.9462 Reviews
      WebsiteView Page
      0Reply
    • Zachary Esparza
      OP
      Investor · Grand Rapids, MI · Member since 2026 · 9 posts · 1 vote
      2h

      Message me Drew? It won't let me send you one

      0Reply
  • Alex KhanPro Member
    Specialist · Southeast Michigan · Member since 2015 · 302 posts · 244 votes
    4h

    I have Sec8 rentals and also flip and manage for small pool of investors. I would say its definitely worth it but I am also local and able to find those deals in cash and refi once I have a tenant in place.

    The money is made in the BUY! Even if you find a light rehab in outer suburbs for 50/60% market value which requires some cosmetics and light rehab which you will ultimately get a 3 bed voucher for.

    Buy cash, rehab(Finance rehab only if you have to) place a sec8 tenant after Compliance and you're all setup with MSHDA. (easy) Refinance and pull all your cash out and then some. Repeat.

    248-979-8119
    0Reply
    • Zachary Esparza
      OP
      Investor · Grand Rapids, MI · Member since 2026 · 9 posts · 1 vote
      2h

      Hi Alex. I appreciate your input. Unfortunately buying cash just doesn't work for me at this point in time. Hoping to find something that works with a conventional loan. With 10%-25% down. The rest of my saved money goes towards capex for the 1st year and any rehab costs.

      0Reply
  • James WachobBusiness Member
    Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 893 votes
    3h

    Hi @Zachary Esparza ! I think you're right to pay close attention to property taxes. They can make or break a rental deal, especially when you're targeting Section 8 and trying to maintain consistent cash flow. I wouldn't rely too much on general lists naming Detroit a top investment market. What matters is whether the numbers work on the specific property after taxes, insurance, maintenance, vacancy, and management.

    I'd also compare the actual tax assessment and projected rental income before making an offer. Sometimes a property looks like a great deal based on its purchase price, but the ongoing expenses tell a completely different story. If the numbers don't work, there's nothing wrong with looking at other markets.

    I'm a real estate agent based in Memphis, TN, and I work with out-of-state investors building rental portfolios. Memphis may be worth researching as an alternative, particularly if you're focused on affordable properties and rental cash flow. I'd be happy to connect and help you compare the numbers if you're open to exploring another market.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free