RentalCalcs Editorial · michigan-2026-10-19-v1 · Reviewed 2026-10-19

Michigan: evidence to offer worksheet

Free property worksheet. Entries remain in this browser page and are not submitted or saved. Print or save your completed worksheet before closing. The worked example is hypothetical, not a property quote or market forecast.

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1. Match the evidence

Detroit’s market cap metric is a screening reference, not a discount rate for every acquisition. West Michigan operations cannot be used to manufacture a regional cap spread. Before comparing two offers, reconcile their income dates, tax basis, vacancy loss and required work. A higher advertised yield may disappear when the buyer replaces an incumbent owner’s tax bill and catches up deferred repairs.

2. Complete the local document checks

Detroit: the cap is only as useful as the income behind it

Tie the unit ledger to bank deposits and delinquency aging. Verify Detroit registration, inspection and applicable lead-clearance documents; price incomplete work before accepting the broker’s NOI.

Ann Arbor and Southfield: distinguish a local supply calendar from a metro recovery

Replace the historical pipeline with current certificates and leasing dates. Separate student and conventional leases, compare bedroom mix, and model vacancy by month instead of smoothing turnover across a year.

Grand Rapids and Lakeshore: improving occupancy still requires a rent-quality test

Collect signed effective rents, free-rent amortization and turnover days from competing buildings in the same travel area. Obtain matched local closed-sale NOI before setting the terminal cap.

Lansing, Kalamazoo and northern Michigan: do not price the missing comparison

Request local comparable closes, buyer tax estimates and repair bids. Document the likely next buyer and lender; test a longer marketing period and a cash-funded repair reserve.

3. Reconcile the buyer budget

Worked example · annual dollars except acquisition amounts
ItemExample
Purchase price$2,000,000
Scheduled annual rent$324,000
Other recurring income$6,000
Collection / concession / vacancy loss-$30,000
Effective income$300,000
taxes$40,000
insurance$16,000
utilities$20,000
maintenance$30,000
management$20,000
administration$10,000
Recurring expense total$136,000
NOI before debt and reserve$164,000
Annual debt service$93,398
Annual replacement reserve$12,000
Cash after debt and reserve$58,602
Down payment + closing + initial work$990,000

Loan $1,200,000 at an assumed 6.75% for 30 years, monthly amortization. Going-in cap 8.20%; DSCR 1.76× before reserve, 1.63× after reserve; cash-on-cash 5.92%. Cash basis excludes an initial reserve deposit; add any lender-required deposit. No loan quote is implied.

4. Test the exit and invalidate the thesis

Value = annual NOI ÷ (cap percent ÷ 100). Keep cumulative NOI change separate from annual rent growth. A simple value comparison excludes debt payoff, sale costs, income tax and interim cash flows.

Start with collected income

Reconcile the rent roll to deposits, concessions and arrears. Keep student turnover and conventional leases in separate calendars.

Replace incumbent owner costs

Obtain the post-transfer tax estimate and insurance binder. Add professional management and inspection-based recurring maintenance.

Separate operating yield from the exit bet

Test constant NOI at a wider cap, then test lower collections. Keep initial compliance work and required reserve deposits in cash invested.

Evidence ledger