Grand Rapids has one of the tightest housing markets in the Midwest. The city has loosened zoning for small multi-unit homes and accessory dwellings, and investors are using those rules to build.
In short: LendingStreet finances ground-up construction of 1-8 unit investment property in Grand Rapids and the surrounding Kent and Ottawa County suburbs, including Wyoming, Kentwood, Walker, Grandville, Hudsonville and Rockford. Loans are sized on loan-to-cost, funded in inspected draws and priced per project. Infill duplexes, ADUs, small apartment buildings and build-to-rent homes are common.
In the city, Eastown, Creston, Alger Heights, Garfield Park, Roosevelt Park and the West Side have infill lots and older homes that can be replaced or added to. Heritage Hill and other historic districts add design review.
In the suburbs, Wyoming and Kentwood have established neighborhoods and some infill. Walker, Grandville, Jenison, Hudsonville and Byron Center have new subdivisions, and Allendale near Grand Valley State University has student rentals.
Land is the hard part. Buildable lots inside the city are scarce, so many projects start with a teardown of a small or failing house, or with a split of an oversized lot where the zoning allows it. Suburban townships have more raw land but often require public utility extensions or site plan approval.
| Area | Typical build | Consideration |
|---|---|---|
| Eastown, Creston, West Side | Duplexes, ADUs, small multi-unit | City zoning and design rules |
| Heritage Hill, historic districts | Limited infill | Historic review |
| Wyoming, Kentwood | Infill and duplexes | Lot size and utilities |
| Hudsonville, Byron Center, Allendale | Build-to-rent and student rentals | Township approvals |
Over the past several years, Grand Rapids has changed its zoning to allow accessory dwelling units in more districts and to make duplexes and small multi-unit buildings easier to build in some neighborhoods. Check your lot's district and the current rules before you design.
Demand comes from health care, manufacturing, office jobs and students. Medical Mile downtown and the growing suburbs keep rental demand strong.
Small infill projects often fit best: a duplex on a corner lot, a new house with an ADU or a fourplex on a larger parcel.
Grand Rapids requires rental property to be registered and inspected before tenants move in, and suburbs have their own rules. Build that inspection into your schedule.
Each township and city in Kent and Ottawa counties handles its own zoning and permits. Some townships require site plan review for anything beyond a single-family home.
Historic district projects in Heritage Hill and other districts go through the city's historic preservation review, which covers materials, massing and window design. It adds time, but new homes that fit those neighborhoods tend to hold value well.
Every Grand Rapids construction file starts with the budget. The loan is sized on loan-to-cost across land, vertical construction and soft costs, and the terms are set for that specific project rather than from a rate sheet.
After closing, the builder draws funds as work is completed and inspected. Plan for the gap between paying a subcontractor and receiving the draw; investors who budget a cash cushion for that timing rarely stall.
Michigan taxes property on taxable value, which is capped annually and resets to state equalized value, a 50% assessment ratio of market value, when the property sells. A new building is added at its completed value.
Rentals do not receive the principal residence exemption, so investors pay additional school operating millage. Budget the non-homestead rate.
This example is illustrative and not a quote. An investor builds two two-bedroom units on an infill lot where zoning allows a two-family home. Land costs $75,000, hard construction costs $420,000 and soft costs $40,000, for a total project cost of $535,000. For illustration the loan covers 80% of cost, or $428,000, and the investor brings $107,000 plus closing costs; actual LTC is set per project.
Once built and leased at $4,300 a month, the property is valued at $600,000. A 75% DSCR refinance of $450,000 retires the construction loan. Estimated principal and interest runs about $3,070; add taxes of about $860 and insurance of about $160 and the payment is about $4,090, a DSCR of about 1.05x.
Adding an ADU to a new single-family home is another option where the lot allows it, giving two rents on one parcel.
| Item | Amount |
|---|---|
| Land | $75,000 |
| Hard costs | $420,000 |
| Soft costs | $40,000 |
| Total project cost | $535,000 |
| Construction loan (80% of cost, illustrative) | $428,000 |
| Investor cash before closing costs | $107,000 |
| Completed value | $600,000 |
| DSCR refinance (75% of value) | $450,000 |
| Monthly rent | $4,300 |
| Estimated principal and interest | $3,070 |
| Taxes and insurance | $1,020 |
| Estimated DSCR | About 1.05x |
Our investor loans are business-purpose loans on non-owner-occupied property, covering 1 to 8 units: spec homes, build-to-rent houses, infill duplexes and fourplexes and small 5-8 unit buildings. Buildings of 9 or more units are commercial and are handled through our commercial loan program.
Most investors hold new rentals here and refinance into a DSCR loan once leased. Strong rents support the refinance.
Spec homes sell well in Rockford, Hudsonville and Byron Center, where buyers pay for new construction.
Grand Rapids rents for new two-bedroom units are strong compared with many Midwest cities, which is why duplexes and small multi-unit buildings often clear 1.0x on a DSCR refinance even with higher Michigan non-homestead taxes.
Plan winter carefully. Michigan's frost depth and lake-effect snow slow foundation and exterior work, so most local builders try to enclose before December.
A complete package gets a clearer answer. Use the form below or call (877) 298-1001 with the Grand Rapids site, the plans, the budget and your exit. We will tell you quickly whether the project fits and how the draws would work.
The city allows ADUs in more districts than it used to. Check your lot and the current rules.
Yes. Rental property must be registered and inspected before tenants move in.
Completed projects of similar size, or an experienced licensed GC running the build. Projects with no plans, no permits and no experienced builder usually do not qualify.
Yes, including Hudsonville, Jenison and Allendale.
Yes, because they do not receive the principal residence exemption.
Construction loans are sized on loan-to-cost, and the share is set per project based on the plans, budget, builder and exit. Your term sheet shows the exact figure.
The builder completes a stage, an inspection confirms it, and the draw funds. Map your budget to the draw schedule before closing.
Our Michigan construction loans page covers the state.
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