The Numbers

Understand what a Miami deal really looks like. No hype, just math.

Education Only, Not Financial Advice

Everything here is educational. Always validate numbers with your own lender, CPA, and attorney.

Miami at a Glance: Key Numbers (Late 2025)

Prices & Rents

Median Condo Price

~$425,000

Up from $209k in 2015

Median Home Price (Sold)

$530k–$570k

Avg Rent (All Types)

~$3,100/month

Brickell 2BR Rent

$3,975–$4,600/month

Yields & Cap Rates

Gross Yield (Price-to-Rent ~20)

~5.1%

Before expenses — tight for cash flow

Stabilized MF Cap Rates

5.1–5.3%

Class A/B around 5%

⚠️ Bubble Warning

Price-to-rent above mid-2000s boom levels; ownership costs at historic highs.

Core Formulas (Plain English)

Net Operating Income (NOI)

Rental Income – Operating Expenses (before debt)

Include:

• Property taxes

• Insurance

• HOA/condo fees

• Property management

• Maintenance & repairs

• Utilities (if you pay)

• Licensing/permits

Exclude:

• Mortgage principal & interest

• Income taxes

• One-time costs

Cap Rate

NOI ÷ Purchase Price

Example:

$30,000 NOI ÷ $600,000 = 5% cap rate

In Miami, 5–5.5% is typical for stabilized assets. Higher rates often hide issues.

Cash-on-Cash Return

Annual Cash Flow After Debt ÷ Total Cash Invested

Example:

$3,000 annual cash flow ÷ $150,000 invested = 2%

In Miami, low or negative cash-on-cash is common with leverage in prime locations.

Debt Service Coverage Ratio (DSCR)

NOI ÷ Annual Debt Service

Example:

$40,000 NOI ÷ $32,000 debt service = 1.25 DSCR

Lenders typically want ≥1.20–1.25 on investment properties.

Break-Even Occupancy

(Operating Expenses + Debt Service) ÷ Potential Gross Rent

Example:

$51,000 total costs ÷ $60,000 rent = 85% break-even

Below this occupancy, you're feeding the property from your pocket.

Typical Miami Expense Ranges

For a condo or small multifamily in Miami-Dade. These are ballpark ranges — your actual numbers will vary.

Expense Category	Typical Range	Example ($600k Property)
Property Taxes	0.8–1.1% of value/year	$4,800–$6,600/year (~$400–$550/month)
Homeowners Insurance	$5,000–$6,000+/year	$415–$500/month (often higher for Miami)
HOA / Condo Fees	$600–$1,200+/month	$600–$1,200/month (varies widely by building)
Property Management (LTR)	8–10% of rent	On $2,500/month rent = $200–$250/month
Property Management (STR)	15–30% of revenue	Depends heavily on occupancy and service level
Maintenance & Reserves	5–10% of gross rent	On $2,500/month rent = $125–$250/month
Vacancy & Leasing (buffer)	5–8% of gross rent	Plan for 1–2 months/year vacancy

⚠️ The Miami Reality Check

Taxes, HOA, and insurance aren't "details"—they often determine whether a deal cash-flows or bleeds. Together, they can eat 40–50% of your gross rent before mortgage payments.

Sample Deal: Brickell 2-Bedroom Condo (LTR)

This is a realistic example to show how the math works. Not a recommendation.

Deal Assumptions

Purchase Price

$700,000

Down Payment (20%)

$140,000

Loan Amount

$560,000

Rate & Term

7% × 30 years

Monthly P&I

~$3,725

Market Rent

$4,000/month

Annual Income

Gross Rent$4,000 × 12

Total Income$48,000

Annual Operating Expenses

Property Tax (0.85%)$5,950

Insurance$5,300

HOA ($900/mo)$10,800

Management (8%)$3,840

Maintenance$3,000

Misc Utilities$1,200

Total Expenses$30,090

NOI

$17,910/year

Cap Rate

Low but realistic for Brickell

2.6%

Annual Debt Service

$44,700

Cash Flow After Debt

Negative cash flow

-$26,790/year (-$2,230/month)

DSCR

Well below 1.20 lender comfort zone

0.40

👉 What This Example Teaches

A desirable Brickell condo purchased with 20% down at today's rates is likely negative-cash-flow as a long-term rental. The deal only works if you: (1) put more cash down, (2) buy at a discount, or (3) find a low-HOA, low-insurance building. This is exactly why many Miami investors focus on appreciation, not cash flow.

Stress-Testing the Deal

What happens if costs rise or rents fall? Use this framework to test your assumptions.

Insurance Jumps 30%

Impact

$5,300 → $6,900/year

Change

+$1,600/year (+$130/month)

Result:

Already-negative cash flow gets worse

📊 Florida insurance rising faster than inflation

HOA Increases 20%

Impact

$900 → $1,080/month

Change

+$2,160/year

Result:

Cash flow drops by $180/month

📊 New reserve laws & aging buildings = common scenario

Rent Drops 10%

Impact

$4,000 → $3,600/month

Change

-$4,800/year in income

Result:

NOI drops, cap rate and DSCR fall further

📊 Miami rents cooled from peak; softness is possible

⚡ The Reality Check

If your deal only works if everything goes perfectly, it's not a real investment—it's a hope. If modest changes kill your returns, think twice.

Miami Math Checklist: Rules of Thumb

Aim for Reality, Not Fantasy

✓Expect many prime-area condos to show 2–4% cap rates
✓Low or negative cash-on-cash at typical leverage is normal
✓If it sounds too good to be true, it probably is

Don't Ignore the Big Three Costs

✓Taxes: Underwrite ~1% of value/year unless you have exact info
✓Insurance: Model at least $4,000–$6,000/year for most financed properties
✓HOA: Check current fee, reserve study, and any upcoming special assessments

Stress Test Everything

✓Test +20–30% on insurance and HOA
✓Test –10% on rent
✓Test +2–3% vacancy
✓If the deal collapses with modest changes, walk away

Know What's Driving Your Returns

✓In many Miami deals, appreciation and diversification are the main drivers, not cash flow
✓Make that explicit—don't confuse a speculative bet with a cash-flow play
✓Know your exit strategy before you buy

Watch the Bubble Risk Lights

✓Miami's price-to-rent ratio is above mid-2000s boom levels
✓Use high ratios as warning lights, not reasons to panic
✓Be conservative with underwriting assumptions

Ready to Analyze a Deal?

Use the formulas and ranges above to stress-test any Miami property. Don't rush. The math will tell you everything.