Detroit has something most cities lack: thousands of buildable lots that cost very little. The challenge is on the other end. In many neighborhoods, a new home can cost more to build than it will appraise for, so choosing the right block and the right exit matters more than the price of the dirt.
In short: LendingStreet is our top pick for ground-up construction in Detroit. We finance investor builds of 1 to 8 units, including infill spec homes, new rental homes, duplexes and small 5-8 unit buildings in the city and the inner-ring suburbs. Loans are sized on loan-to-cost with terms set per project, draws are released after inspections, and LLC borrowers are standard. Finished rentals can refinance into a 30-year DSCR loan. Get a quote with the form below or call (877) 298-1001.
LendingStreet is built for investors, and in Detroit that means taking a realistic view of each block. We look at the plans, permits, budget, builder experience and, above all, what finished homes nearby have sold or rented for, then size the loan on loan-to-cost with terms set for the project.
Draws are released after inspections. If you plan to sell, we help you check the exit against recent new-construction sales. If you plan to hold, our DSCR program can refinance the finished rental.
Tell us about your lot through the form below or call (877) 298-1001.
New infill homes are going up in neighborhoods where recent sales support new construction prices, such as Corktown, Woodbridge, the North End, West Village, Islandview, Jefferson-Chalmers, Bagley, the University District, Rosedale Park and East English Village. Lots in other areas can be cheaper, but comparable sales may not support the build cost.
In the inner-ring suburbs, Ferndale, Royal Oak, Berkley, Hazel Park, Madison Heights, Dearborn, Southfield and Warren see infill and teardown rebuilds with stronger resale comparables but higher land prices.
The Detroit Land Bank Authority sells vacant lots, often with conditions such as a build or maintenance requirement and a deadline. Read the purchase terms and make sure your schedule can meet them.
Building permits and inspections in the city run through the Buildings, Safety Engineering and Environmental Department. Suburbs have their own building departments and fees.
Detroit requires rental properties to be registered and to pass inspection for a certificate of compliance before they are leased, so add that step to the plan if you will hold. Michigan winters affect excavation and foundation schedules, and many new homes include basements, which add cost and time.
Here is a side-by-side with other lender types Detroit builders use. Terms vary from one lender to another, so read the other columns as general patterns.
| What builders need | LendingStreet | Typical local bank | Typical hard money lender |
|---|---|---|---|
| Focus | Built for investors building 1-8 unit rentals and spec homes | Often favors existing customers with deposits | Short-term deals of many kinds |
| How the loan is sized | Loan-to-cost, with terms set per project | Often lower leverage plus a full personal financial review | Varies by lender |
| Honest look at the value gap | Yes, sized on cost with the exit checked against nearby sales | Varies | Varies |
| What gets reviewed | Plans, permits, budget and builder experience | Often tax returns, financial statements and liquidity | Varies; often the deal and the lot |
| Borrowing entity | LLC borrowers are standard | Varies by bank | Usually allowed |
| Draws | Released after inspections on a set schedule | Varies; may run through internal review | Varies by lender |
| After the build | Refinance into a 30-year DSCR loan qualified on rent | Usually a separate loan with income documents | Usually no long-term option |
| Where they lend | All 50 states and DC | Usually a local footprint | Usually local or regional |
This example is illustrative and not a quote.
A builder buys a vacant lot in a neighborhood with recent new-home sales for $15,000. Hard costs are $285,000 and soft costs (plans, permits, utility connections and fees) are $30,000, for $330,000 in total. In this illustration the loan is sized at 80% of cost, $264,000, and the builder brings $66,000. Hard costs fund in about 4 draws of roughly $71,250 after inspections.
The finished home sells for $400,000. Selling costs of about 6% are $24,000, and paying off the $264,000 loan leaves $112,000. After returning the builder's $66,000, the gross margin is about $46,000, or 11.5% of the sale price, before interest, taxes and carrying costs during the build. The whole margin depends on that sale price, which is why the block matters so much.
Rental property in Michigan does not get the principal residence exemption, so it pays the higher non-homestead school millage. Detroit's combined millage is high compared with most of the state, and taxable value is uncapped when a property transfers. Confirm the expected bill with the city or county assessor before you plan a hold.
Michigan charges both state and county transfer taxes on a sale. Insurance varies widely by neighborhood in Detroit, so get a quote early.
Use this list with every lender you speak with:
LendingStreet's answers: loan-to-cost sizing with terms set per project, and leverage that can be lower on larger balances and 5-8 units (varies by program); draws after inspections on a set schedule; builder experience or an experienced general contractor; LLC borrowers as standard; and a DSCR refinance with a 1.0x standard minimum, a 620 minimum credit score and seasoning that varies by program.
Strong requests include plans and permits or permits in process, a line-item budget with contingency, recent comparable new-home sales or rents and a builder with finished projects. Projects without plans or permits, or with no build track record and no experienced general contractor, usually do not qualify.
Projects of 9 or more units are commercial. For 1-8 unit builds in Detroit and the surrounding suburbs, get a quote with the form below or call (877) 298-1001.
Our top pick is LendingStreet. We finance 1-8 unit investor builds on loan-to-cost, release draws after inspections, lend to LLCs, check the exit against nearby sales and can refinance finished rentals into a 30-year DSCR loan.
Yes. We lend in Detroit, Wayne, Oakland and Macomb counties, across Michigan and in all 50 states and DC, on non-owner-occupied investment property.
Yes, if the project meets our requirements and the land bank's conditions, including any build deadline.
That is a real risk in parts of Detroit. Choose blocks with recent new-construction sales, keep the budget tight and confirm the exit before you start.
After each stage of work, an inspection confirms progress and the draw is funded. Our draw schedule calculator shows how a budget splits into stages.
Yes. Register it with the city, pass the rental inspection and refinance into a DSCR loan qualified on rent. The standard minimum DSCR is 1.0x.
Experience matters. A first-time builder usually needs an experienced general contractor on the job.
Use the form below or call (877) 298-1001 with your lot, plans and budget.
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