Cap rates 7.5–9.0% · Median price $130,000 · Median rent $900/mo · Population 630K
Detroit offers the highest raw cap rates of any major US metro but requires deep local knowledge. The city's ongoing revitalization creates significant value-add opportunities — but vacancy and management intensity are real risks.
Here's what the numbers look like on a typical Detroit rental at current market rates (20% down, 7.5% rate, standard expenses):
| Metric | As-Is (Current Rents) | Stabilized (Market Rents) |
|---|---|---|
| Purchase Price | $130,000 | $130,000 |
| Down Payment (20%) | $26,000 | $26,000 |
| Monthly Rent | $810 | $900 |
| Monthly Mortgage | $727 | $727 |
| Monthly OpEx (est 35%) | $284 | $315 |
| Est. Monthly Cash Flow | $-201/mo | $-142/mo |
| Cap Rate | 4.9% | 5.4% |
* Estimates only. Uses 20% down, 7.5% rate, 30yr term, 35% expense ratio, 5% vacancy. Run your own numbers with the calculator below.
Best for cash flow: Focus on workforce housing in established neighborhoods with strong employer anchors. Avoid chasing the highest raw yield numbers — the 10% cap rate in a declining neighborhood often means vacancy and management headaches that destroy returns.
Best for appreciation: Target neighborhoods within 2 miles of job centers, universities, or transit that are in the early stages of gentrification. Look for the coffee shop / yoga studio signal — amenities follow renters, and renters follow amenities.
Best for STR: Check local STR regulations carefully before investing. Some {name} neighborhoods have restrictions on short-term rentals.
DSCR Loans: Most Detroit properties qualify for DSCR financing with a 1.0+ ratio. Use our DSCR Calculator to check qualification before making an offer.