I do still see strong tenant demand in the A/B areas.

Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.So, the flood of new investors switched to buying Class B properties.

When to 1031.Most investors pull the trigger when:They want to scale doors (1 house → 2–4+ units).They’ve maxed out appreciation and don’t see much upside left.They want to consolidate into stronger locations (sounds like you’re thinking this way with the “type B” town).Or when a property starts to feel like “lazy equity” — lots of value tied up but not enough cash-on-cash return.3.

The carryover basis doesn't meet the used property acquisition requirements under 1.168-K-2(b)(3)(iii)Specifically it no longer meets the "acquisition by purchase" piece defined in 1.179-4(c)(2) "The reg cite for the bonus deprecation eligibility is Reg. §1.168(k)-1(f)(5)(iii)(A).

Seems every new investor fails to understand the difference between Class A, B, C & D Neighborhoods/Properties/Tenants:(They all assume anything they buy will be Class A - and then are shocked when their performance expectations aren't met.So, yes you can easily find properties to BRRRR in the Midwest - but most of them will be Class C or D with tenants having credit scores under 600 => which have a 20% chance of nonperforming on their lease!

Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.So, the flood of new investors switched to buying Class B properties.

The most logical approach is to pick the Neighborhood(s) that meet your BuyBox (Class A, B, C or D) and then look for properties, having someone knowledgeable about Detroit verify the properties you've selected are on good blocks.

Do you have backup lenders lined up, or a plan B?

Medical office ~6.9%–7.1% (national  avg ~6.9%; Quick notes:Cap rates vary by class (A/B/C), tenancy, lease term, and submarket.

Quote from @Nick B.: The Story:Back in 2019 I invested in a new construction of an apartment complex.