Where the 22.1% comes from — and why the headline rent figure is not the whole story

Measured as a passive investment, this building runs a small cash deficit: $142,056 of gross rent, less 25% for taxes, insurance, vacancy and upkeep — 25% and not the usual 28%, because the tenants now pay their own utilities and there is nothing on the outside of this building to repaint, gives $106,542 of net operating income against $94,957 of annual debt service. That is −$9,683 a year, about $807 a month, and it is stated here rather than left to be found.

But this is an owner-occupied building, and that is a different instrument. Three things run at once:

The shortfall is smaller than the principal build-up. $807 a month funds a building that three tenants are buying, in a residence the owner lives in rent-free. The return climbs every year as the amortisation curve turns and rents follow the market, while the payment is fixed for thirty years.

None of this depends on appreciation, which is deliberately excluded. It is the return if the building is worth exactly what it is worth today, forever.

How to read this document

Three things govern every page, and they are worth stating before the numbers start.

1. The headline is return on equity, not rent. Gross rent is the figure most development pitches lead with, and it is the one that tells you least — it says nothing about what was spent to earn it. The number that matters here is 22.1% on $297,400 of equity in year one, and it is built from three separate things that can each be checked independently: housing the owner does not pay for, principal the tenants pay down, and the rents themselves.

2. The weak spot is volunteered, not buried. On a full-cost basis this building runs a deficit of −$807 a month in year one. It is stated in section 00, again in section 09, and it is not smoothed out of any table. The answer sits beside it: the shortfall is smaller than the principal the tenants retire in the same month, and it shrinks every year as the amortisation curve turns while the payment stays fixed for thirty years.

3. No appreciation is assumed. Anywhere. Every return on these pages holds if the building is worth exactly what it is worth on completion, forever, and if rents never rise. In this market both are unlikely — which is the point. The upside is real and it is deliberately uncounted, along with everything in section 11.

It rents on things this market cannot match

One residence per floor. No shared walls with anyone, a private landing at the head of its own stair, nobody above the top floor and nobody below the ground one. Almost nothing in Grand Rapids can print the whole floor is yours in a listing.

A master suite — bedroom, walk-in closet, double-vanity bath — plus two further bedrooms and a second bath, in every residence — and a garage stall each, in-unit laundry, separate metering so the tenant pays their own heat, and an acoustic floor assembly at FIIC 58–62. Level 2 adds a 744 SF private terrace. Level 1 has its own street door and a walled porch.

Every line has been tested against rent

Every item in this building answers one question: does it raise the rent, or fill the unit faster? Section 06 sets out the result line by line, with the return beside each entry.

The specification sits deliberately where tenants notice it — kitchens, bathrooms, four real bedrooms, an acoustic floor assembly, private outdoor space — and deliberately plain where they do not. The test was applied before the money was committed, not after.

What is not yet resolved — stated plainly

A document that hides these is worth less than one that names them.

• Cost exceeds capitalised value by about $168,000. At $278/SF against a Grand Rapids market range of $200–260, the remaining gap is a procurement problem, not a design one — section 10 sets out the $268,000 of process savings that closes it.
• $297,400 of equity is required, because the conforming ceiling for a three-unit property caps the loan at $1,288,800.
• No lot is under contract, no contractor has priced it, and no engineer has stamped it. The $200/SF is a placeholder and every figure here moves with it.
• The rent roll above assumes all three residences are let. With the owner in one, three are let and personal income carries roughly $5,500 a month — the arithmetic is in section 10.

The reveals turn the corner — and cost nothing to carry round

The facade is carried by one gesture, and it is cut into the building rather than applied to it: the glass sits seven to eight inches back from the wall face, with a solid pier of pale render landing between the bays. Because it is depth rather than a layer, it cannot look cheap and it cannot date — and the shadow moves all day, so the elevation changes hour by hour.

It wraps all four faces, so the building reads as designed from every approach rather than presenting one good elevation and a blank wall. Carrying it round costs nothing, which is why it does. Ask for the reveal depth explicitly on the drawings. A builder pricing for speed sets windows flush unless told, and flush windows are the single clearest tell of a cheap building.

Wood frame, and the acoustic money spent where it works

Wood frame, with the acoustic budget concentrated in the floors. Insulated concrete form is a genuinely good system — structure, insulation and mass in one trade — but in a building with one residence per floor nobody has a neighbour through a wall. The only sound path between households is vertical, and wall mass does nothing about footsteps from above. That is the floor assembly’s job, and the topping slab, resilient mat and isolation hangers have to be bought either way.

So the premium bought exterior quiet the site may not even need, at roughly $60/SF of hard cost the rents cannot carry. Wood frame with a premium floor assembly delivers the acoustic promise for less, which is the whole point: FIIC 58–62 between floors is the marketing line, and it survives this change untouched.

The envelope pays twice

This is the highest-return move available in a cold climate, and it works twice. A genuinely airtight, heavily insulated shell can halve the heating equipment the building needs — so part of the insulation pays for itself on day one, at purchase, in a smaller heat pump and less ductwork. The rest returns every winter for fifty years. The envelope is bought before anything mechanical; it is the only line in the budget that reduces another line.

Stock window sizes, ganged

Custom glazing is where a facade budget disappears without anyone being able to see what they bought. Use stock unit sizes and gang them — two or three standard units mulled side by side inside one structural opening — and the wide glass line arrives at catalogue prices, with replacement units available off a shelf in fifteen years instead of as a special order.

It suits this building specifically. The facade idea is the depth of the reveal, not the width of a single pane, so a slim mullion between ganged units costs the design nothing — the shadow does the work. Set the reveal dimension from the stock sizes rather than picking an opening and asking a supplier to match it, and the whole elevation lands on a module for free. One schedule, repeated three times, on every floor.

One slab selection for the whole building

A single stone or quartz selection across all three kitchens and every bathroom means one bulk purchase, one fabricator setup and one template visit — and offcuts that become window sills, shelves and shower returns instead of waste. Buying four different worktops means paying four setup charges to generate four piles of offcut. It is also the cheapest way to make a building read as designed rather than assembled: one material, everywhere, in a grey/black/white scheme that has nowhere to hide.

Buy the panel, not the paint

Painted render on a three-storey wall is a repainting bill every 8–12 years, on scaffolding, forever. Through-coloured fibre-cement panel costs more up front and never needs painting — the colour goes through the material, so a chip is the same colour as the surface. On a building held for the long term, that is the single best-value upgrade in the whole finishes package, and it is invisible in a photograph, which is exactly why people cut it.

Confirm the colours outdoors before anything is signed

Order physical samples — not a chart, not a screen — and look at them outside, on an overcast Grand Rapids day, which is what the building will live under most of the year. Off-whites that look crisp in a showroom go yellow or pink under grey sky, and blacks that look rich indoors flatten to charcoal. Stand the sample vertically against the sky, not flat on a table; a wall and a tabletop catch completely different light.

If a spa ever lands out there, its position is an engineering call — made in advance

A filled four-person spa is about 3,500 lb — inside the 100 psf an occupied terrace already carries, if it sits over a bearing line, and the engineer sets that line, not the furniture plan. So the structural drawings mark the approved spa zone now, the same way the gas stub is already under the deck: the option costs nothing today, and skipping this step is how a $9,000 spa buys a $38,000 framing bill later.

Why the outdoor room is here and not on the roof

One rule decides where amenity money goes: it pays only where the expensive part is already bought for another reason.

The garage needs a roof whether or not anyone stands on it, so this deck, its waterproofing and its guard arrive with the structure. Everything on top of that is finish: terrace deck $28,000 — and a gas line stubbed under it for $800. Everything else out there is furniture, bought later, moved anytime — $28,800 for a furnished 744 SF outdoor room attached to one residence.

The top of the building carries no such head start. Making a main roof walkable means structure, guardrail and a protected membrane before a single fixture goes down — and that spend earns nothing on its own. So the roof above Level 3 is membrane, drains and the three heat-pump condensers, and the outdoor room sits where it pays for itself.

Keep the membrane serviceable

Whatever furniture lands on the deck later sits on pads, never fixings; the waterproofing below is the only part that cannot be replaced without a crane and a season.

Four-person, $9,000 — and it is the better tub, not just the cheaper one

The spa is $5,000–7,000 for a quality four-person unit, plus about $1,000 to boom it onto the roof, $1,500–2,500 for the dedicated 50A GFCI circuit and its in-sight disconnect, and about $800 for water, drain and a cover lifter. Call it $9,000 installed — roughly $5,000 saved against the six-person version, on top of the reinforcement it avoids entirely.

It is also the better choice on its own merits. 280 gallons costs about a third less to hold at 102° through a Michigan winter, reheats far faster after use, and four seats is what a terrace actually fills on a normal evening. Below about $5,000 the insulation gets thinner, which is paid for again every month, so that is the floor.

It lifts by boom rather than crane. At this size the tub goes up on a boom lift from the driveway, with no glass to thread it through, so it does not have to arrive before the rest of the terrace is finished. That keeps a crane day and a fixed point out of the programme.

Glass walls inside Level 3 — different problem, easy yes

Interior glass partitions are the opposite situation: a single-occupant floor has nobody to be private from, and a glass wall between the office and the living room pushes daylight from one side of the plate to the other. Black steel-framed glazed partitions are the version that suits this building — the grid reads as deliberate against grey and white, and it costs a fraction of frameless. Budget roughly $150–300 per SF of partition. The one real cost is acoustic: glass carries sound, so keep it between rooms where that does not matter and use solid walls around the bedroom.

Light the room indirectly and the mirror lasts longer

Interior lighting changes night-time visibility more than the glass spec does. Bright downlights near the glass turn a window into a lit stage. Cove lighting, lamps set back from the perimeter, and warm low levels keep the reflection working well after dark, and cost nothing to specify now. Lighting a terrace outside the glass helps too: it restores the brightness difference the coating needs.

Where does the glass go, before how much of it

Glass on the side facing a parking lot or a taller building is a liability whatever is spent on it; glass facing a view, or facing the building’s own terrace, is free privacy forever. This is decided by the site and the orientation of the plate — which is why the site choice, not the window budget, is the real privacy decision.

The discipline behind the number

The specification is set by one rule: money goes where a tenant meets it every day, and nowhere else. Kitchens and bathrooms carry the largest share because they decide lettings. Four real bedrooms follow, because rent tracks bedroom count in this market. The acoustic floor assembly follows those, because noise is why tenants leave.

Everything a tenant never sees or touches is plain by design — a simple gabled roof, a plain rectangular form, stock windows ganged into wide openings, one worktop selection across the building. One question decides every line: does it service debt, or does it not?

Where further cutting would start costing money

There is a floor to this. Reduce the kitchens, the acoustic assembly, the in-unit laundry or the garage and the money is not saved — it moves, from capital cost into lower rent and longer vacancy, permanently. A residence that sits empty two extra months a year costs more than any line above.

The remaining $268,000 to reach the financing target in section 10 therefore comes out of procurement, not specification — competitive bidding, floor-to-floor height, soft-cost structure. None of it is visible in a photograph or in a viewing.

The strongest thing in the building costs nothing

One residence per floor. No shared walls with anyone, a private landing at the head of its own stair, nobody above Level 3 and nobody below Level 1. That is worth more per month than any amenity in the table above, and it is free — it falls out of the plate size. It should be the headline of every listing: the whole floor is theirs. Almost nothing else in this market can say it.

Its own front door is what stops Level 1 being the cheap flat

In almost every small apartment building the ground floor is the one that lets last and lets cheapest — least light, least privacy, people walking past the windows. A private entrance straight to the street plus a walled 470 SF patio flips that completely: the unit stops reading as the bottom flat and starts reading as a small house, which is a different tenant and a different rent. It is $21,000 for paving, a privacy wall and a door, and it is worth roughly $300 a month — it pays for itself inside six years and lets faster the whole time. Build the wall high enough for real privacy from the sidewalk; a knee-high edge does none of this work.

The garage roof terrace belongs to Level 2, not Level 1

A ground-floor residence sits at grade, so it cannot step out onto a roof that is ten feet above it — the terrace naturally belongs to the floor whose level it matches, which is Level 2. That is a real gain: it hands the second residence a private 744 SF outdoor room, which is the single strongest thing a family unit can be given in a building with no yard. For Level 1 to have it instead, the building has to be raised so the ground floor sits about ten feet above grade — which means exterior steps or a ramp to the front door, an accessible route that gets considerably more expensive, and a very different street presence. Worth deciding deliberately rather than by accident.

An attached garage is a fire-separation problem before it is a parking one

Code treats a garage attached to dwellings as a hazard to be sealed off, and the details are not optional. The wall and ceiling between garage and residence need a rated assembly; the door into the building must be rated, self-closing and self-latching — a normal door held shut by a spring will fail inspection; and there can be no direct opening into a sleeping room. Carbon monoxide detection is required on the residence side. None of this is expensive when drawn from the start; all of it is disruptive to add once the wall is up.

The driveway is why alley access must be asked about before an offer

Alongside the building the garage needed another 22′ of frontage and forced two cars into tandem. At the rear, three doors sit side by side and every stall is independent — but the cars still have to get there. If the lot backs onto an alley, they arrive from behind and the frontage requirement stays at 60–66′. If it does not, a 13′ driveway runs the full length of the side yard, which needs roughly 70′ of frontage, costs about $24,000 in concrete and kerb cut, and gives up the side yard entirely. Same building, materially different lot. It is the single most useful question to ask about any parcel.

Why three bedrooms is the rent-maximising plan, not a compromise

The clearest number in this market: a two-bed and a four-bed of identical floor area price about $900 a month apart. Floor area is not what this market pays for — bedrooms and bathrooms are. So the plan holds three real bedrooms and two full bathrooms — and spends the fourth bedroom’s area where this building’s actual tenant spends their attention: a master suite with a walk-in closet and a double-vanity bath.

Three is also the deepest pool of tenants in Grand Rapids: it takes a family, it takes two professionals sharing, and it takes a couple who want an office. A four-bed rents for more but to far fewer people — it is a scarcity premium, and scarcity premiums do not survive being offered three times in the same building. Three identical master-suite residences do not compete with each other; they simply let. Highest rent that is also the easiest to rent is exactly where these two curves cross — and the tenant a suite attracts renews, which is the rent nobody prints in a listing.

The Level 2 terrace is the cheapest amenity in the building

The structure, the waterproofing, the guard and the door were already bought — the terrace existed the moment the garage got a flat roof at the second floor level. The deck ships bare on purpose: the 744 SF room itself is the amenity, and a stubbed gas line means a fire table can land on it any weekend without a trade visit. At roughly $100 a month it returns about 6%, which is better than the garage and behind only the private outdoor space itself.

Bare decking photographs as a roof. A lawn and a fire photograph as a place to be, and that is the difference between a listing people scroll past and one they book a viewing for.

Identical is worth real money, and most of it is invisible

Kitchens sit over kitchens, bathrooms over bathrooms, washers over washers, and the core and the wet wall land in the same place on all three floors. That single discipline is most of why a small building is affordable to plumb and quiet to live in. Drawing one residence instead of three cuts the design fee, collapses the window, cabinet, door and worktop orders into one schedule each, and means every trade builds the same floor three times instead of learning a new one twice — which is where the real saving is, because the second and third time are always the cheap ones.

It pays again for twenty years: one set of spares, one appliance model, one worktop offcut that fits any of the three, and a turnover already done twice before.

One template, three times — the master suite is the plan

Every residence lives like a house: a master suite — bedroom, walk-in closet and a double-vanity bath — plus two further bedrooms beside a very large living room. That is the plan itself, not an upgrade to it. The shell, the wet walls, the windows, the kitchen and the front door repeat identically on all three levels — one residence drawn once, priced once and built three times.

What it costs is one line in section 12: $12,300 across all three floors. The master bath is bath 1 grown into the pantry — a dry room, so no soil stack, wet wall or drain moves. The walk-in closet is the linen + utility volume refitted, and the larder becomes a full-height cabinet in the kitchen run. The run beside the hall becomes a full storage bank — closets, linen and coats — which a residence this size otherwise never has.

The dining bay sits where dining belongs — open to the kitchen, one room down the east glass, with the bath and laundry column on one side and the master’s bath and walk-in below: no bedroom shares a wall with the room people eat in. The bay is framed for a wall, so closing it makes any floor a 4 bed / 2 bath again. The only thing that changes by floor is Level 3’s projecting balcony off the master — the interiors are identical to the stud.

The building is valued, let and sold as three identical master-suite residences — and the owner’s floor becomes a choice made at move-in, not a framing decision.

Where the desk goes

Working from home is a rent driver, and it is worth being specific about — “study nook” on a plan usually means a shelf. Here the answer is a whole room.

Bedroom 3 is drawn as a bedroom and works as an office — 110 SF with a door, on the quiet side of the plate, wired with two Cat6 drops and a full outlet count at first fix. A tenant who takes calls for a living rents this as a two-bed-plus-office and pays the three-bedroom rent for it; a family uses it as the third bedroom. The same room, let twice over to two different markets, with no change to the drawing.

That is the advantage of a room that is honestly both: the plan does not have to guess which tenant turns up.

Stack the laundries, and never put one over a bedroom

A washer at 1,200 rpm on spin is the loudest thing in a residential building after footsteps, and it transmits as vibration through the structure rather than as airborne noise — which means the acoustic floor being paid for does not stop it. Two rules fix it for free at the drawing stage: put all three laundry rooms in the same position on every floor so each one sits above another laundry, and make sure that position is not above anyone’s bed. On a concrete pad with resilient mounts, nobody hears it at all.

Ventless heat-pump dryers — skip four holes in the building

A vented dryer needs a duct to the outside, and code caps the run length once elbows are counted. Three floors of that means three penetrations through the envelope, three lint traps that can never be inspected, and long runs that dry clothes slowly. Heat-pump dryers need no vent at all: they cost roughly $1,200–1,800 against $700 for a basic vented unit, and they delete the ductwork, the envelope penetrations and the single most common cause of building fires. Slower per load, and worth it three times over.

A drain pan and an auto shutoff under every washer

Burst washing-machine supply hoses are one of the largest sources of residential insurance claims, and in a stacked building a failure on Level 3 becomes a Level 2 and Level 1 problem within minutes. A pan plumbed to a drain plus a leak-sensing automatic shutoff valve runs a few hundred dollars per unit at rough-in. The building owner carries this cost when it is skipped.

Separate meters are the difference between a good and a bad rental

If heat, power and water are on one meter, the owner pays every tenant’s utilities and has no way to influence use. Separately metered units move that cost to the resident, remove the worst variable expense, and materially raise what the building is worth when valued on income. It costs more at the panel and the service entry, and it has to be designed in from the first drawing — retrofitting separate services into a finished building is close to impossible.

Three columns, not one — budget, committed, spent

The single number above is the planned spend. It says nothing on its own once work starts. A real build tracks each package three ways: budget (what was allowed), committed (what is under signed contract) and spent (what has actually been paid). The gap between budget and committed is the remaining exposure, and it is the only figure that gives early warning of an overrun. Set this up before the first contract, not after the fifth.

Contingency is spent by decisions, not surprises

On most builds the contingency does not go on hidden rock or bad soil — it goes on the design changing after the trade is priced. A change during design costs a redrawn sheet; the same change after framing costs the framing twice. Every change made after a package is bid comes out of this $124,700, and once it is gone the money comes from equity. Knowing that is what keeps it intact.

Get three bids per package, and never take the lowest on price alone

A number well below the others usually means the bidder misread the scope, and the difference reappears as change orders. Compare what is included line by line before comparing totals. The glazing, the acoustic floor assembly and the garage are the three most likely to be quoted on different assumptions here — make each bidder state exactly what they have allowed for them.

How the tub avoids reinforcement — it is position as much as size

A permanent spa is dead load, not live load. It sits there permanently, so it adds to the 100 psf the terrace already needs rather than counting inside it. A larger tub — 9′×9′ at 700 gallons — would put about 97 psf of permanent weight on one square of terrace, effectively doubling the design load and pulling $38,000 of framing back in with it.

The four-person tub is roughly 3,500 lb full with four people in it — 280 gallons, a 6′6″ square footprint, about 83 psf. That alone still would not be free. So it goes directly over the core wall — the stair shaft that runs the full height of the building — and the load drops straight down structure that already exists. Right size plus right position is what takes the reinforcement line to zero; either one on its own would not.

Four person is roughly where this stops working. Go to a six-person, 500-gallon unit and the load is back near 100 psf of permanent load, off the core, and arguing with the engineer about a beam. Four is the largest tub that fits inside the structure the terrace already requires.

$47,000 of the remaining $135,000 buys nothing visible

Structure and guardrail. Neither is optional the moment a person can walk on the terrace, and together they are more than a third of what is left. Worth knowing because it sets the floor: making any roof walkable starts at about $47,000 before the first amenity. The three things on the terrace — tub, fire, lawn — come to $44,400 on top of that. The rest is membrane, paving and services.

Removing the roof entirely would save $135,000 and lose the single feature separating this building from every other three-unit in Grand Rapids. It should not be cut further.

The number the financing actually sets: $1,357,000

Fannie Mae allows 5% down on an owner-occupied 2–4 unit property (policy effective November 2023, replacing the old 15–25% requirement), and it waives the self-sufficiency test that normally makes a triplex hard to finance. Investor-owned 2–4 units still require 25% down — living in one of the residences is the entire basis of the concession.

But the loan is capped. The 2026 conforming ceiling for a three-unit property is $1,288,800 in baseline counties, and Kent County is a baseline county. That sets a hard target for this whole document:

Build for under $1,357,000 and the entire project fits inside a 5%-down loan — about $68,000 of cash. Every dollar above that has to be funded with equity rather than debt: at the current $1,487,000, the loan caps out and $297,400 has to come from somewhere. The cost target and the financing target are the same target.

Three things to confirm with a lender before relying on any of this. First and most important: the 5% programme applies cleanly to buying an existing triplex, and this is ground-up construction — it needs a single-close construction-to-permanent loan for those terms to carry through, and not every lender writes them. Otherwise the build sits on a construction loan at 20–25% down and refinances into the conventional product at completion. Second, owner-occupancy is mandatory, typically for at least twelve months. Third, have the lender pull the Kent County limit rather than assuming the baseline.

And the occupancy consequence, stated plainly: if one residence is lived in rather than let, the rent roll is two residences, not three — roughly $7,300 a month against a $7,914 payment. The figure on the cover assumes all three are let.

How this qualifies — and why DSCR is the wrong measure

A debt-service-coverage ratio measures an investor loan. This is an owner-occupied one-to-four unit loan, which qualifies a different way: on the borrower’s debt-to-income, with the rents from the other two residences counted at 75% of gross. A DSCR would describe a loan this is not.

So the question is a personal one: at a 45% back-end ratio and no other debts, $5,487 a month implies gross income of roughly $146,000 a year. That is the number this plan is built to satisfy. Taxes and insurance above are indicative and should be replaced with a real assessor figure and a real quote before any application — on a build this size, a half-point of millage moves the answer.

The design work already done is worth $15,000–30,000 of the architect’s fee

Architects price by effort, and full service typically runs 6–12% of construction cost — on $1,487,000 that is $120,000–235,000, and it sits inside the $253,000 soft-cost line in section 12. The first of the three phases they bill for is schematic design: resolving the plan, the areas, the massing and the material palette.

That phase is what this document and the accompanying drawing set already contain. A dimensioned typical plan built three times, net areas room by room, a section, two elevations, a site plan, a materials schedule, a fixture and finishes schedule, and a fixed cost target the design was tested against. The brief is not a conversation to be had — it is a set to be checked.

So the instruction to an architect is specific: quote for design development through permit against a resolved schematic, not for full service from a blank sheet. Three quotes on that scope, and the saving is real — plausibly $15,000–30,000, and several months off the programme, because the design decisions that usually consume the first phase have already been made and priced.

What it does not replace, and this is a legal point rather than a quality one: a three-storey, three-unit building falls under the Building Code rather than the Residential Code, so the permit set must be sealed by a licensed architect or professional engineer. Structural, mechanical, electrical and plumbing drawings, wall sections and details, code analysis and specifications all come with that appointment. This set is schematic design — it shortens that work and sharpens the brief. It does not substitute for it.

Give the architect the number as a constraint, not a hope

“$200 per square foot of hard cost is the budget” is a design input, in writing, at the first meeting. Nearly every overrun in small development comes from the same order of operations: design first, price second, then discover. A cost target stated after the drawings are done is not a target, it is a disappointment with a date on it. This single sentence is worth more than every other item on this page.

Three bids, identical drawings, same day — the largest number on this list

The spread between three general contractors bidding the same complete set is routinely 10–15%. On this building that is $250,000–375,000 — more than every design decision in this document combined, and it costs nothing but the discipline to finish the drawings before asking.

Compare what is included line by line before comparing totals, and never take the lowest on price alone: a number well below the others usually means the bidder misread the scope, and the difference reappears as change orders. Bid in winter for a spring start; contractors are hungrier.

Buy an independent estimate at half-design

An independent cost estimator, engaged at roughly 50% design, costs $3,000–5,000 and tells the truth before anything is committed. It is the cheapest money in the project and it is the line almost every first-time developer skips — then spends fifty times over discovering the same information from a bid.

Floor-to-floor at 9′6″, not 11′

Height is charged across every wall, every stair run, the envelope area and the volume that has to be heated for fifty years. Dropping from 11′ to 9′6″ on the rental floors is worth 3–5% of hard cost and no tenant has ever measured a ceiling. Keep the extra height on Level 3, where it is a decision rather than a habit.

Protect the simple box, and extend the repetition

Every corner, offset and change of plane is priced twice — once in structure and once in envelope. This building is already the cheapest enclosure shape there is; the job is to stop it growing bays during design. And carry the repetition past the floor plan: one window size ganged, one door type, one cabinet run, one tile, one worktop slab. Three identical floors is worth little if they are fitted out from three different schedules.

Fixed-fee design, and a contingency that steps down

A percentage-of-cost architect fee quietly rewards a more expensive building; a fixed fee does not. Engage engineering competitively rather than by referral. And once drawings are genuinely complete, soft costs should sit near 12% and contingency near 8% rather than 15% and 10% — worth roughly $60,000, and defensible only at the point where the scope has stopped moving.

Owner-supply the things that carry a markup

Appliances, plumbing fixtures and light fittings carry a general contractor markup of 10–20% and are the easiest items in the building to buy directly. The schedule in this document is specific enough to order from. Agree it in the contract up front — retrofitting an owner-supply arrangement mid-build causes more argument than it saves.

Every change after a package is bid comes out of contingency

A change during design costs a redrawn sheet. The same change after framing costs the framing twice. Contingency is not spare money and it is not a slush fund for second thoughts — it is the reserve for what nobody could have known. When it is gone, the money comes from equity. Knowing that is what keeps it intact.

The lower level — in the base case, and the arithmetic behind that

A Michigan foundation goes below the frost line whatever else happens, so the excavation, footings and foundation walls are bought before anyone decides what sits inside them. Finished basement space in this state runs $27–85 per square foot against $200–350 for above-grade — it is the cheapest area this building will ever buy.

The core stair simply carries on one flight down: a small common landing serves the lettable lockers and the plant room — so a tenant reaches their locker, and a contractor the boiler, without crossing anyone’s home — and everything else sits behind Level 1’s own locked door. It is not a fourth dwelling — which matters, because a fourth unit would change the conforming ceiling, re-impose the Fair Housing design requirements and unwind the reason this is three storeys at all. It gives Level 1 a street door, a walled porch and a lower level — making it, in letting terms, a five-bedroom, three-bath house with a family room, competing with single-family rentals rather than apartments. The lockers stay lettable to the other residences and the building’s plant sits off the rentable floors.

The arithmetic, loaded the way every other line here is loaded: $134,000 of construction — the lower level, the stair run down and bedroom 5’s egress window — becomes $168,000 once it carries the same 15% soft costs and 10% contingency as the rest of the building. Against $1,250 a month that is a 6.4% marginal return against the building’s own 7.16% yield — the first line in this building where the marginal dollar earns more than the average one.

What it does to the headline numbers, stated plainly. It nearly doubles the monthly margin, from $963 to $3,924, and cuts the annual shortfall from $20,489 to $9,683. It takes cost per square foot from $308 down to $278, the lowest figure anywhere in this document. But the loan is already at the conforming ceiling, so every dollar of it is equity: cash at closing goes from $166,200 to $297,400, and year-one return on equity falls from 20.8% to 22.1%.

It is in the base case because it cannot be added later. The decision belongs to the week the foundation is designed, not the year the rents are reviewed — and a lower level bought at $85 a foot inside a building whose above-grade space costs $268 is the only place left where the cost curve still bends.

Mid-term furnished letting — real demand, different business

Grand Rapids has genuine mid-term rental demand from travelling medical staff, with 243 furnished listings in the market and a hospital system that runs on rotation. Furnished mid-term lets price materially above unfurnished on a monthly basis.

It is deliberately not in any number in this document. It is a different business: furnishing capital per residence, turnover every few months, and active management rather than a twelve-month lease. Presenting it as base-case income would overstate the plan.

What it is worth stating is the optionality. The building suits it without modification — full-floor privacy, in-unit laundry, a garage stall and separate metering are exactly what a relocating professional looks for. If the long-term market ever softens, there is a second demand pool already in the city, and no capital work is needed to reach it.

Why none of this is in the base case

Because a plan that needs its upside to work is not a plan. Every figure in sections 00 to 10 holds without a single item on this page — the rents cover the loan, the return on equity is 22.1%, and the cost target is set by the financing rather than by hope.

These are what the building can do next, priced now so the decisions are ready rather than improvised. This section is headroom, not forecast.

Four things justify a premium here, and none of them are the finishes

A private garage stall is worth $150–250/month on its own in a Michigan winter, and almost no comparable building offers one per unit. Separate metering means the tenant pays their own heat, so the rent is clean rather than bundled — compare carefully against listings that include utilities. Genuine acoustic separation (FIIC 58–62) is the thing renters cannot see on a listing but feel in week one, and it is why people renew. And new construction in a market of century-old housing stock carries its own premium: no draughts, no radiators, no surprise repairs.

What occupying a residence costs

A whole floor and the 744 SF terrace — the strongest residence in the building, and the natural owner’s pick. If it were let it would carry the highest rent here, around $3,500 a month, roughly $42,000 a year. That is the true cost of living in it, and it is worth naming plainly: not a loss, but a real number that should be a deliberate choice rather than an assumption.

The three identical floors differ only by outdoor space

All three levels are the same residence, so the entire spread between them is outdoor space and position. Level 2 tops the three on a 744 SF private terrace — an outdoor room, and nothing comparable in this market has one. Level 1 sits just under it: a private street door and a walled porch put it in competition with houses rather than apartments. Level 3 is the quietest floor, with a private steel balcony off the master.

Test it: list Level 2 first at $3,350. If it lets inside two weeks the whole building is priced too low, and the other two should move before anything is signed.

Verify against three real listings before a number is set

Everything above is market data plus reasoning, not a comp study, and rents move. Before leasing, pull three actual current listings within a mile that have similar bedroom counts and parking, and check the gap. If this building is not clearly better than all three, the premium is not there and the numbers should come down. Rents from a document are a starting point; a real comp beats them every time.

Ceiling height and glass

Ceiling height and window area are the strongest luxury signals per dollar in a residential building — nobody can name why a room feels generous, but everyone feels it. The residences here run nine-foot ceilings on a 9′6″ floor-to-floor, which is the point where the feeling arrives and above which the cost curve turns sharply: height is charged across every wall, every stair run, the envelope area and the volume heated for fifty years.

The glass does the rest of the work, and it does it through depth rather than area — a window set seven inches into a thick wall reads as more expensive than a larger one set flush.

Anything the hand touches

Solid-core doors, weighted hardware, stone counters, real tile. These are felt every single day and are a small fraction of the build.

Silence and lighting

The quiet already being paid for is the most expensive-feeling thing in a building. Layered, dimmable lighting is the cheapest way to make grey and black read as elegant rather than flat.

Design the tub bay, and the way out

The four-person tub — about 6′6″ square, 280 gallons — lands near 83 psf, which sits inside the 100 psf the terrace already has to carry. That is the whole reason there is no reinforcement line: size and position, directly over the core. The large version (9′×9′, 700 gallons, roughly 111 psf) is what cost $38,000 in extra framing. Still leave a removal path — a removable parapet section or a clear boom line — or replacing it in fifteen years becomes demolition. Running cost is the quiet trade: any tub held at 102° through a Michigan winter is a permanent utility line, and 280 gallons is about a third cheaper to hold than 400.

Open air is what keeps it simple

The tub is open to the air under a canopy, which is what keeps it simple: it ventilates itself, so it needs no dehumidification, no vapour barrier and no moisture-rated finishes. What it does need is ordinary exterior detailing done properly — a well-drained deck, a hard cover used every time, and waterproofing beneath the tub continuous with the terrace membrane rather than stopped at its edge.

Two bedrooms at 110–118 SF — snug on purpose

The plan puts its two further bedrooms at 105 and 108 SF — legal, common, and genuinely snug. That is deliberate. Rent tracks bedroom and bathroom count; construction cost tracks floor area. Area spent making the second and third bedrooms roomier earns nothing — so the area goes to the rooms this building’s tenant actually shops on: the master suite.

Where this stops working: below about 110 SF a bedroom stops reading as a bedroom and starts reading as a box room, and the rent premium goes with it. Bedroom 3 sits at 105 SF — nearly on that line. It cannot be shaved again.

Rough in the second bathroom and the urinal together

The Level 3 guest bath sits on the living side so a visitor never crosses the bedroom, and stacking it over the bathrooms below keeps it on the same wet wall — cheap if drawn now, expensive as an afterthought. The wall-hung urinal in the primary bath needs its own supply, a 2″ drain, venting and blocking in the wall. Included in the first-fix plumbing it costs almost nothing; added afterwards it means opening a finished wall and cutting into a stack. The roof needs no plumbing beyond drains and hose bibs, so the only decision here is the urinal — and it has to be made before the plumber starts.

Slope the canopy, and throw the water clear

The canopy is standing-seam metal, which carries no condensation problem of its own — but it introduces a simpler one. A flat or near-flat cover dumps meltwater off its low edge in exactly one line, and if that line is where people step in and out of the tub, it ices there all winter. Pitch it, and set the low edge and its drip line away from the entry side, over paving that drains. Roughly 10–15° is enough to shed and still read as flat from the street.

Who overlooks the terrace?

An open terrace is not private by default — it is private only because nothing nearby is taller. Before the site is chosen, check sightlines from every neighbouring building and from anything zoning would still allow to be built next door. The fixes are all cheap now and awkward later: put the tub and the fire pit on the sheltered side, use the canopy wind screens as sightline screens on the exposed face, or simply orient the open faces away. This is the same check as section 05 and it has the same answer — height does the work, and only if it is verified before the lot is bought.

Thermally broken frames on the glass

This is the one place not to shop on price. Cheap single-glazed frames facing the terrace in February mean condensation running down the glass and ice on the tracks. Insulated glass and thermally broken frames, rated for roof-level wind load. Budget roughly $1,500–2,500 per linear foot of opening.

The lawn is a drainage detail, not a decoration

The raised planting beds are cut — saturated soil runs about 100 lb per cubic foot, and a 2′-deep bed weighs roughly what a person does every 18 inches of run, which is structure and waterproofing bought to grow something nobody is paying rent for. Anything added up there later carries the same lesson: keep it movable, and keep the membrane clear. Get that last one wrong and the terrace smells every August. Decide the falls with the engineer, not afterwards with a garden centre.

Roof infrastructure, even if the furniture waits

Structural capacity for the tub, the gas line to the fire pit and bar, drainage, waterproofing and railings all go in during construction. Retrofitting any of them onto a finished terrace costs several times more. Decking, planters and furniture can arrive in year two.

Bespoke rental layouts

Three different floor plans triples the drawing, plumbing and cabinetry cost and no tenant ever knows. Repeat the plate.

No elevator, and only three residences — Fair Housing design requirements do not reach this building

The Fair Housing Act’s accessible-design requirements attach to buildings of four or more dwelling units. This building has three and no lift, so none of it is triggered: no required accessible route from the street, no 32″ clear-passage doors, no bathroom walls blocked for future grab bars, no mandated kitchen and bathroom clearances or reach ranges. That is an entire category of constraint and cost the fourth floor would have brought with it. None of it is expensive when drawn from the start. All of it is brutal to retrofit, and getting it wrong is a lawsuit rather than a punch-list item. Say it to the architect in the first meeting.

Assume a sprinkler system until the city confirms otherwise

A three-storey building with three dwelling units will very likely require automatic sprinklers to NFPA 13R. That is a water service upsized for fire flow, a riser room, piping through every ceiling, a fire department connection and an alarm. It is a large number and it touches every ceiling detail in the building, so it cannot be an afterthought. Confirm it with the Grand Rapids building department before schematic design ends — and if it is required, it also affects the stair and egress question above.

Fire-rated separation between residences, and the acoustic layer is not it

Floors and walls between dwelling units need a rated assembly — typically one or two hours — and that rating is separate from the sound isolation you are buying. They are usually built together, but every penetration compromises both: recessed lights, speaker cutouts, plumbing stacks, duct runs. Each one needs the correct rated detail. This is precisely how a carefully designed quiet building gets undone during rough-in, one hole at a time.

Ventilation is what makes a tight building safe rather than sick

Everything on this page pushes toward an airtight, heavily insulated shell — correct for Michigan, and it removes the accidental air leakage that older buildings rely on to dry out. Without a heat-recovery ventilator per unit, moisture from three showers and three kitchens has nowhere to go, and the result is condensation inside the walls and mould behind the finishes. The ERV is not a luxury line item. It is the thing that makes the insulation safe.

Take one photograph from the middle of every candidate lot

Stand in the middle of the lot, face each of the four directions, and photograph all four. That single set of images answers more design questions than any listing: what overlooks the site, where the afternoon sun lands, which face deserves the glass, and whether the view is worth the money section 04 spends on glazing. Do it before an offer is made, not after.

Get the zoning answer in writing before you offer

“Three units should be fine” from an agent is worth nothing. Ask the Grand Rapids planning department directly, for that parcel, in writing: permitted units, height limit, setbacks, required parking, and whether sprinklers are triggered. It is free, it takes a phone call and an email, and it is the difference between a building and a very expensive vacant lot.

Can this be a single-stair building?

Two stair towers eat roughly 424 SF per floor — nearly a quarter of the plate. If one stair is permitted at this height, that area returns to the residences and the whole budget conversation changes.

How does Fair Housing design apply?

It does not. The accessible-design requirements attach at four or more dwelling units; this building has three and no lift, so none of it — accessible routes, 32″ clear doors, reinforced bath walls — is triggered. Confirm with the plan reviewer in writing anyway. Owner occupancy does not exempt the design requirements. Confirm before layouts are fixed.

What does an occupied terrace trigger?

An occupied terrace raises egress, guardrail, drainage and structural questions at once, even with no enclosed rooms up there. This is the detail most likely to reshape the top of the building.

What lot does this actually need?

A 42′×44′ plate plus setbacks, parking and refuse sets your minimum site. Take this program shopping — do not buy land and then discover it cannot hold the building.

Turn structure adherence UP

Every one of these tools has a slider — structure adherence, fidelity, or denoising strength. Set it high. Low means the AI invents its own building from your image as loose inspiration; high means it renders this building, keeping the floor count, the proportions, the deep reveals and the roof. That single setting is the difference between a picture of The Slate and a picture of some other building entirely.