Rental yield and cash flow for a Miami condo
A Miami condo can look like a strong rental on the rent figure alone and still lose money every month once the maintenance fee, taxes and insurance are in. This works out what is actually left.
Rental yield, cap rate and cash flow
Estimate only. Rent should be what comparable units in that building are actually let for now, not the highest number you have seen advertised.
How this is worked out
Net operating income is rent after vacancy, minus everything it costs to run the place — but before any mortgage. That is the standard definition and it is what makes properties comparable to each other regardless of how they are financed.
Cap rate = net operating income ÷ price. It answers "what does this asset yield if I owned it outright?"
Cash flow = net operating income minus mortgage payments. This is what actually reaches your account.
Cash-on-cash = annual cash flow ÷ the cash you put in. It answers "what is my deposit earning?" and it is the number most investors care about, because leverage changes it dramatically.
Not included: closing costs on the way in, capital gains or depreciation recapture on the way out, and income tax on the rent. Those are real and they are personal to you.
Why Miami condo cap rates look thin
If you are used to looking at rentals elsewhere, the cap rate this produces may seem low. There are three reasons, and they are all real rather than accounting quirks.
The maintenance fee. In a full-amenity Edgewater tower it can run $1 to $1.50 per square foot per month. On a 1,000 square foot unit that is $12,000 to $18,000 a year before you have paid a single other bill. Buildings with a pool deck, gym, valet, concierge and a bay-front position cost money to run, and owners pay for it whether the unit is let or not.
Insurance. Both yours and, through the fee, the building's. Florida coastal insurance has moved sharply and it flows into the HOA line.
Reserve funding. Post-Surfside legislation means buildings must now fund what they used to defer. That is unambiguously good for the building and for your unit's long-term value, and it compresses today's yield. Thereserve study guide explains what to look for.
Short-term letting changes the maths — where it is allowed
Nightly and weekly letting produces materially higher gross revenue and materially higher costs: furnishing, cleaning, platform fees, higher turnover, and much more of your time or a manager's. It also produces a bigger vacancy swing between season and off-season.
The binding constraint is usually not the maths. It is the building. Most Miami condo associations restrict minimum lease terms, and only a specific set of buildings genuinely permit short stays. Buying a unit for short-term income in a building that forbids it is an expensive mistake, and the restriction sits in the declaration, not the listing.
The guide to Miami buildings that allow short-term rentals covers which do and what the rules actually say. Check it before you model nightly rates.
Related
- What the unit costs you each month
- What you would net if you sold it
- Edgewater rental approval rules, building by building
- How to read a condo budget
Questions people actually ask
What counts as a good cap rate for a Miami condo?
There is no universal answer, and anyone quoting one without seeing the building is guessing. What is useful is comparing units against each other on the same basis — which is exactly what a cap rate is for. Run two buildings through this and the difference is the signal.
Should I include my mortgage in the cap rate?
No, and the calculator does not. Cap rate deliberately ignores financing so that two properties can be compared. Financing shows up in the cash flow and cash-on-cash figures below it.
Is 8% a sensible vacancy assumption?
It is about four weeks a year, which is reasonable for an annual let with a gap between tenants. If the building has a slow approval process, push it higher — a unit sitting empty waiting for the association to approve a tenant is still empty.
What about depreciation and tax?
Deliberately excluded. Depreciation, deductible expenses and your own bracket can change the after-tax picture significantly, in both directions, and it is genuinely a question for your CPA.
Work with Stefania
Want real rent comps for a building?
Send the building and Stefania will come back with what units there are actually letting for now, the current fee, and what the association allows.
Got it — that reached Stefania directly.
She answers enquiries personally, usually the same day. If it is urgent, call(786) 828-0091.