Between the State Capitol, Michigan State University and General Motors' Lansing plants, the region has a deep renter base. Michigan's tax rules mean the bill you inherit at purchase is rarely the bill you will pay.
In short: LendingStreet finances 5 to 8 unit rental buildings in Lansing, East Lansing and the surrounding parts of Ingham, Eaton and Clinton counties with DSCR loans that qualify on rent, not income. Loans start at $150,000, the standard minimum DSCR is 1.0x and LLC borrowers are standard. In Michigan, taxable value uncaps after a sale and rentals pay non-homestead school millage, so budget taxes on your purchase price, not the seller's bill.
In Lansing proper, older homes divided into apartments and small brick buildings are common on the Eastside, in Old Town, REO Town and the blocks near the Capitol. The Westside and Moores River areas have quieter streets with a few small buildings.
East Lansing's rental market is built around MSU, with large houses and small buildings leased to students near Grand River Avenue. Okemos, Holt, Delta Township and DeWitt have 1970s and 1980s garden buildings that rent to state workers, hospital staff and GM employees.
| Area | Typical stock | What to check |
|---|---|---|
| Eastside, Old Town, REO Town | Divided homes, small brick buildings | City rental certification, older systems |
| East Lansing near MSU | Student houses, small buildings | Rental license, occupancy limits |
| Delta Township, Holt, Okemos | 1970s-1980s garden buildings | Township rules, school millage |
| Near the Capitol | Older walk-ups | Parking, owner-paid heat |
Under Michigan's Proposal A, a property's taxable value can rise each year only by inflation or 5%, whichever is less, while the owner holds it. When the property sells, taxable value uncaps to the state equalized value, which is roughly half of market value. A building owned by the same person for decades can have a taxable value far below what the next owner will pay on.
An owner-occupant can claim the principal residence exemption from school operating millage. A rental cannot, so a building that was owner-occupied in part may see a jump. Use the city or township treasurer's millage sheet for non-homestead property and apply it to an estimated state equalized value based on your price.
Michigan has a state real estate transfer tax and a county transfer tax, both customarily paid by the seller.
This example is illustrative and not a quote. An investor buys a six-unit building on Lansing's Eastside for $540,000. The seller's taxable value had been capped for years, so taxes are budgeted on uncapped value at non-homestead millage. The 6 units rent for an average of $925 each, or $5,550 a month in total. Taxes are budgeted at $850 a month and insurance at $300.
At 75% LTV the loan is $405,000, estimated principal and interest on a 30-year term is about $2,832, and the full payment is about $3,982, for a DSCR of about 1.39x. At 70% LTV the loan drops to $378,000, the payment to about $3,793 and the DSCR rises to about 1.46x, with $27,000 more brought to closing.
If the investor had used the seller's tax bill, the ratio would have looked stronger than it will be after uncapping. Owner-paid heat would also reduce real cash flow, even though it is outside the DSCR formula.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Purchase price | $540,000 | $540,000 |
| Loan amount | $405,000 | $378,000 |
| Down payment | $135,000 | $162,000 |
| Estimated principal and interest | $2,832 | $2,643 |
| Property taxes (monthly) | $850 | $850 |
| Insurance (monthly) | $300 | $300 |
| Total monthly payment | $3,982 | $3,793 |
| Gross monthly rent | $5,550 | $5,550 |
| DSCR | About 1.39x | About 1.46x |
The City of Lansing requires rental properties to be registered and certified, with periodic inspections by code compliance. East Lansing requires rental licenses and limits the number of unrelated occupants in many zoning districts, which is especially important for student buildings.
Ask the seller for the current certificate or license, the permitted occupancy and any open violations. An expired certification can delay leasing and complicate a refinance.
Michigan winters are hard on roofs, gutters and older boilers. Many Lansing buildings have a single boiler with owner-paid heat, and gas bills on an eight-unit building can be large in January. Ask for 12 months of utility bills.
Pre-1978 buildings carry lead paint disclosure obligations, and some older buildings have galvanized plumbing or limited electrical service. Carriers price these risks, so get a quote before you finalize your offer.
Ice dams and freeze-thaw cycles cause many of the roof and water claims in mid-Michigan. A roof under 15 years old helps with both pricing and carrier choice.
State government is the largest employer, followed by MSU, Sparrow and McLaren hospital systems and GM's Lansing Delta Township and Lansing Grand River plants. That mix gives the region steady demand, while student rentals near campus follow the academic calendar with summer turnover.
Because the Lansing building has eight units or fewer, the file is reviewed under residential DSCR guidelines. Income comes from the rent roll and the appraiser's market rent opinion, and the payment side includes principal, interest, taxes and insurance. Personal income documents are not part of the qualification.
Program basics: $150,000 minimum with no stated maximum, up to 80% LTV on purchases, up to 75% LTV on cash-out, a 1.0x standard minimum ratio, a 620 minimum credit score and 30-year terms. On five to eight units, maximum LTV is frequently below the headline numbers and varies by program, so plan your down payment conservatively.
Tell us the address, unit count, rents and what you want the loan to do, using the form below or (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. The financing team runs the ratio at a few loan amounts so you can see the tradeoff between leverage and DSCR. See also our Michigan 5-8 unit DSCR page.
Usually, yes. Taxable value uncaps to state equalized value after a sale, and rentals pay non-homestead school millage.
Yes. The city requires rental registration and certification with periodic inspections.
Yes. Many East Lansing zoning districts limit unrelated occupants, which affects student rentals. Confirm the licensed occupancy.
By custom the seller pays both the state and county transfer taxes.
Yes, if it is licensed and the rent roll is supported by market rent. Student leases count like other leases.
The standard minimum is 1.0x, meaning rent covers the full monthly payment. Sub-1.0 programs exist for some buildings with strong value and reserves.
Loans start at $150,000 with no stated maximum. Purchase leverage goes up to 80% LTV and cash-out up to 75%, but maximum LTV on 5-8 units is often lower and varies by program.
The appraiser's market rent can support vacant units on some programs, but a building with weak occupancy usually gets more scrutiny. A bridge loan can carry a lease-up before a DSCR refinance.
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