Tutorial: 3 Tax Uncapping Methods

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Three Ways Detroit Investors Try to Estimate Uncapped Property Taxes

(And Why It’s Really a Personality Test)

If you’ve ever tried to figure out what your Detroit property taxes will be after purchase, you already know this truth:

Property taxes in Detroit are never clear.

They weren’t clear when my husband and I bought our first houses back in 2007, and they’re still not clear today. That’s why investors keep coming up with methods — not answers — to estimate what their uncapped taxes might be before they buy.

In this article, I’m going to walk you through three real-world methods investors actually use to estimate future property taxes in Detroit — and why these methods say as much about your risk tolerance as they do about math.

Important disclaimer:
I’m not a lawyer. I’m not an assessor. These are not official rules — they’re approaches investors are using in the real world to get closer to the answer, not pretend certainty exists.

What does “uncapping” mean in Michigan?

In Michigan, property taxes are capped for longtime owners. Your taxable value can only increase by the rate of inflation or 5% — whichever is lower.

But when a property sells, that cap comes off.

That’s called uncapping, and it means:

  • The taxable value can reset closer to current market value

  • Taxes can jump dramatically the year after purchase

  • A deal that looked great on paper can suddenly stop cash flowing

This is why planning for uncapped taxes before you buy is critical.

Step one: find the assessed value (SEV)

Before you can estimate anything, you need the State Equalized Value (SEV).

In Detroit, you can find this by:

Once you have an SEV, many investors plug it into the Michigan Property Tax Estimator, which calculates taxes using current millage rates .

But here’s the catch…

The assessor can change everything

Between the day you buy a property and the day you receive your tax bill, assessors may:

  • Reassess the neighborhood

  • Decide values should be closer to half the purchase price

  • Do this without warning

Detroit often reassesses neighborhoods every 3–5 years, which means today’s SEV may not protect you tomorrow.

That’s where the three methods come in.

Method #1: Jay’s method (The conservative investor)

This is the safest and most conservative approach.

Jay’s method:

  1. Take the purchase price

  2. Divide it in half (assumed SEV)

  3. Plug that number into the Michigan Property Tax Estimator

That’s it.

This method assumes:

  • Worst-case reassessment

  • No mercy from the assessor

  • No delay in valuation changes

Jay’s method protects people who can’t afford surprises. As Jay puts it:

“A thousand dollars here or there can break some people.”

Method #2: Tommy’s method (The calculated risk-taker)

Tommy is willing to take more risk — and he often gets more deals.

His method:

  • Look at similar homes that sold 12–14 months ago

  • Focus only on uncapped sales

  • Use MLS data to see what SEVs those homes were actually assigned

  • Average them

  • Plug that average into the Property Tax Estimator

This method assumes:

  • Assessors value by neighborhood, not individual houses

  • Renovation quality doesn’t always matter as much as location

  • Patterns emerge over time

The downside?
It takes time, access to data, and experience — and results can still feel inconsistent.

Method #3: The California investors’ formula (Volume investors)

My California clients buy a lot of Detroit houses — sometimes dozens at a time. Because they operate at volume, they accept more risk on individual properties.

Their formula looks like this:

  1. Purchase price ÷ 2

  2. × Detroit millage rate (about 86.5)

  3. ÷ 1,000

  4. × 0.8 buffer

That 0.8 factor reduces the final tax estimate by 20%.

Why?
Because they believe assessors usually do not immediately reassess at full half-of-purchase-price levels — and across many properties, the savings outweigh the occasional surprise.

This method is:

  • Less conservative than Jay

  • More optimistic

  • Based on long-term averages, not single properties

So… which method is “right”?

That’s the frustrating — and honest — answer:

None of them are guaranteed.

  • Jay’s method protects you from bad surprises

  • Tommy’s method can uncover overlooked opportunities

  • The California method works best for investors doing volume

In some under-assessed neighborhoods, all three methods wildly overestimate taxes. In “hot-ish” neighborhoods, Jay’s number may eventually become reality.

Detroit investing often feels like watching a Netflix series that ends without resolution — and that’s just the truth.

Final thoughts

Despite the uncertainty, Detroit remains a compelling place to invest:

  • Homes under $100,000

  • Strong rental demand

  • Rents that still work even with higher taxes (if planned correctly)

I work with both buyers and sellers in Detroit, and I help investors think through these exact scenarios every day. If you want help analyzing a specific property — or figuring out which “personality” fits you — feel free to reach out. Monique@greatdaypm.com

And if you want more Detroit-specific investing insights, I publish new videos every Saturday.

Thanks for reading — and welcome to Detroit investing.