Miami Cap Rate Calculator
Stop using generic national averages. Plug in actual Miami-Dade operating expenses—including our notoriously high windstorm insurance—to see if that multifamily listing actually cash flows.
The capitalization rate (cap rate) is the fundamental metric of commercial real estate. However, in South Florida, standard rules of thumb often fail because they don't account for extreme localized expenses.
Core Assumptions & Market Reality
As of Q3 2023, Class B and C multifamily properties in Miami-Dade are trading at compressed cap rates, often sub-5%. The primary killers of cash flow that out-of-state investors miss are:
- Property Taxes: Assessed values re-set upon sale. If the previous owner held for 10 years, your tax bill will jump significantly due to the removal of the Save Our Homes cap (for residential) or the 10% non-homestead cap reset.
- Insurance: Windstorm coverage has increased by 40-100% YoY for older buildings without full impact glass or new roofs.
Common Mistakes
The most common error is relying on the seller's pro-forma Net Operating Income (NOI). Sellers often exclude management fees (assuming you self-manage) and under-report realistic maintenance and reserves.
Frequently Asked Questions
For Class A stabilized assets, expect 4.5% to 5.25%. Value-add Class C in tertiary neighborhoods might hit 6.5%, but carries significant execution risk.
No. Cap rates measure unleveraged returns. To calculate cash-on-cash return, use our Commercial Mortgage Calculator.