Detroit multifamily investment guide

Three guides in this series now address the same question from three states, and the answers escalate. The question is what happens to your property tax assessment when you buy a building.

In Ohio, nothing happens, because Revised Code 5715.19 bars a board of education from filing an original valuation complaint at all. In Allegheny County, Pennsylvania, something may happen, because any taxing body with a vested interest may appeal, and a successful appeal resets the assessment to 49.3 percent of current market value. In Michigan, something happens automatically, and nobody has to decide to pursue you.⁵⁶

The mechanism sits in Section 211.27a of the General Property Tax Act, implementing the constitutional amendment Michigan voters passed as Proposal A in 1994.

Subsection (1) sets the base: "property shall be assessed at 50% of its true cash value under section 3 of article IX of the state constitution of 1963." That figure is the state equalized valuation.

Subsection (2) then caps what you actually pay tax on. Taxable value each year is the lesser of "[t]he property’s taxable value in the immediately preceding year minus any losses, multiplied by the lesser of 1.05 or the inflation rate, plus all additions," or "[t]he property’s current state equalized valuation." So while an owner holds, taxable value climbs at five percent a year at most, and by inflation in most years, while the underlying value does whatever the market does.

Subsection (3) is the one to read twice. "Upon a transfer of ownership of property after 1994, the property’s taxable value for the calendar year following the year of the transfer is the property’s state equalized valuation for the calendar year following the transfer."

The Michigan Department of Treasury states the same thing in plain terms: "a transfer of ownership will cause the taxable value of the transferred property to uncap in the calendar year following the year of the transfer of ownership."

Now the consequence that we think most acquisition models get wrong, and it is not subtle once stated. The gap between a property’s taxable value and its state equalized valuation is created by time. A seller who has held an asset for twenty years through a period of rising values has a taxable value far below half of what the building is now worth. A seller who bought last year has almost no gap at all. The length of the seller’s ownership is the size of the buyer’s tax increase.

Which means the trailing twelve months of property tax expense on the offering memorandum is not merely stale, it is wrong in a predictable direction, and it is most wrong on precisely the assets that look cheapest to operate. A long-held, well-maintained building with attractive historic expenses is the one where the pop-up is largest. We would treat the seller’s acquisition date as a required diligence field, and we would model the tax line at the state equalized valuation implied by the purchase price rather than at anything in the historicals.

• Assessed value is 50 percent of true cash value.
• Taxable value grows at the lesser of 5 percent or inflation while an owner holds.
• On transfer, taxable value becomes the state equalized valuation the following year.
• No taxing body has to file anything for this to happen.

The seller’s holding period is your tax increase. The trailing twelve is most wrong on exactly the assets that look cheapest to operate.

Metro Detroit inverts the usual relationship between a core county and its suburbs, and the figures are worth stating because they change where the demand actually is.

Wayne County holds 1,769,038 people, down 1.4 percent since April 2020. Oakland County, immediately north, holds 1,288,337, up 1.1 percent. So far this is the familiar shape we found in Indianapolis and Milwaukee.²

The business data is where it diverges. Census figures for 2023 put total employment at 665,558 in Wayne and 733,671 in Oakland, with 33,699 employer establishments in Wayne against 39,792 in Oakland. The suburban county has more jobs and more businesses than the county containing the central city, despite having roughly 480,000 fewer residents.¹

That is not a rounding difference and it should govern where an investor looks. The employment base this metro runs on is substantially north of the Wayne County line, in a county where median household income is $97,760 against Wayne’s $60,539 and poverty is 7.6 percent against 22.1.¹²

The offsetting point is tenure. Oakland County is 72.7 percent owner-occupied, so only 27.3 percent of households rent, against 35.2 percent in Wayne. The money is in Oakland and the renters are in Wayne, which is the same structural problem we identified in Milwaukee.²

Metro employment overall is flat and the labor market weakened over the summer. Total nonfarm employment was 2,040,700 in July 2026, up 0.2 percent, but unemployment rose to 6.0 percent from 5.4 percent in June, a six tenths increase in a single month and higher than the 5.1 percent we recorded in the Houston metro. Manufacturing, at 234,500 jobs, was flat at 0.1 percent, as were trade, professional services and education and health. Only leisure and hospitality at 1.6 percent and government at 1.1 moved materially upward; information fell 4.5 percent.¹

• Oakland County: 733,671 jobs and 39,792 establishments.¹
• Wayne County: 665,558 jobs and 33,699 establishments, with 480,000 more residents.¹
• Unemployment rose to 6.0 percent from 5.4 in a single month.¹
• The money is in Oakland and the renters are in Wayne.