How To Analyze Cash Flow On A Miami Condo Investment

Does the condo you’re eyeing in Miami actually cash flow once you add HOA fees, insurance, and taxes? Many investors are surprised by how quickly expenses stack up here. If you want a clear, Miami-specific way to run numbers before you write an offer, you’re in the right place. In this guide, you’ll learn a step-by-step cash flow method, the local costs that matter most, a conservative worked example, and a due diligence checklist tailored to Miami–Miami Beach–Kendall. Let’s dive in.

Cash flow basics for Miami condos

Before you build a model, align on simple definitions that keep your math clean:

• Gross scheduled rent: total annual rent if the unit stayed fully occupied at your assumed monthly rent.
• Vacancy allowance: your expected percentage of time the unit is not producing rent.
• Effective gross income (EGI): gross rent minus vacancy.
• Operating expenses: all non-mortgage costs to operate the unit.
• Net Operating Income (NOI): EGI minus operating expenses.
• Annual debt service: total principal and interest paid in a year.

Key return formulas you’ll use:

• Cap rate = NOI ÷ purchase price.
• Cash-on-cash return = annual cash flow after debt ÷ total cash invested.
• Break-even occupancy = (operating expenses + annual debt service) ÷ potential gross rent.

Gather your numbers

Price, rent, and mortgage rate

• Price: Pull the actual list or closed price for the specific unit and building. Miami condos vary widely by submarket and amenity level.
• Rent: Zillow’s rent index shows average asking rents around $2,900 per month across greater Miami as of early 2026. Neighborhoods like Brickell, Edgewater, and Miami Beach can be higher or lower. Build your assumption from 3–5 comparable long-term listings in the same building or similar buildings.
• Mortgage rate: Use the current weekly reading from the Freddie Mac Primary Mortgage Market Survey to size your monthly payment. In early February 2026, the 30‑year fixed averaged about 6.1%. Rate changes move monthly P&I a lot, so update this input before you finalize an offer.

Operating expenses to verify locally

• HOA fees: Miami-Dade condo association fees have risen meaningfully since 2021. A local sample showed a median near the $900 per month range by mid‑2024, with big differences by building and amenities. Review the association budget and reserve study, not just the listing. See the local fee trend context in this Miami-Dade HOA fee summary.
• Property taxes and stamps: Miami-Dade property taxes often land around 1.0% to 2.5% of assessed value, depending on city and exemptions. Use the county tools and rules outlined in the Miami-Dade Tax Collector FAQs to estimate the bill and understand documentary stamps at closing.
• Insurance: Condo owners typically carry an HO‑6 policy for the interior and liability. The building’s master policy is paid through the HOA and has its own deductible. Florida’s insurance market has shifted, with state actions to stabilize rates and Citizens’ policy counts changing. Review current pricing trends at Citizens Property Insurance and get quotes tied to the specific building.
• Property management: Expect about 8% to 12% of collected rent for long-term management in Miami, plus leasing fees. Full-service short-term rental management often runs 20% to 30%. See ranges in this Miami management fee guide.
• Maintenance and reserves: As a baseline, set aside at least 1% of property value per year or about $1 per square foot for maintenance. Older buildings or those with upcoming work may require more. Here is a practical overview of reserve planning concepts from Doorstead’s process guide.
• Vacancy: For a stabilized long-term lease, 4% to 8% vacancy is common in Miami. Short-term rental occupancy is seasonal and highly variable. Never assume STR income unless the city and association allow it.
• Short-term rental rules: Many associations restrict lease terms, and cities impose permits or ban STR in certain zones. Review requirements specific to Miami Beach on the city’s short-term rental page, and confirm your building’s rules in the declaration and amendments.
• Flood exposure: Check the FEMA flood zone for the property. Lenders usually require flood insurance in Special Flood Hazard Areas. Use the county’s interactive flood maps to see your risk.

Step-by-step cash flow method

1. Set your gross rent.

• Use in-building or like-kind comps to estimate monthly rent. Annualize by multiplying by 12.

2. Subtract a vacancy allowance.

• For long-term, plug 4% to 8% based on your comfort and the building’s leasing history. EGI = rent × (1 − vacancy%).

3. Subtract operating expenses to get NOI.

• Include HOA, property taxes, insurance, management, maintenance reserves, utilities you pay, licensing, and a reserve for special assessments. NOI = EGI − operating expenses.

4. Subtract annual debt service.

• Use the current 30‑year fixed rate from Freddie Mac PMMS for a realistic monthly P&I. Cash flow after debt = NOI − annual debt service.

5. Evaluate returns and risk.

• Cap rate = NOI ÷ purchase price.
• Cash-on-cash = cash flow after debt ÷ total cash invested.
• Break-even occupancy helps you see how much vacancy or rent drop your deal can absorb.

Example: a conservative run

Use these inputs to see how small changes can swing outcomes. Verify all numbers for the exact unit and building you are evaluating.

Assumptions:

• Purchase price: $500,000.
• Expected rent: $2,500 per month, or $30,000 per year.
• Vacancy: 5%. EGI = $28,500.
• HOA: $800 per month, or $9,600 per year. Note that many buildings in Miami-Dade run higher, so confirm the actual fee and what it includes. See the local trend context in this HOA fee summary.
• Property tax estimate: 1.8% of price, about $9,000 per year. Use the county FAQs to refine by municipality and exemptions.
• Owner insurance (HO‑6 and liability): $2,500 per year. Confirm with current quotes.
• Property management (long-term): 10% of rent, $3,000 per year. For fee ranges, see this Miami guide.
• Maintenance reserve: 1% of value, $5,000 per year. For reserve planning concepts, review Doorstead’s process.
• Utilities and misc: $1,200 per year.

NOI calculation:

• Operating expenses = HOA $9,600 + tax $9,000 + insurance $2,500 + management $3,000 + maintenance $5,000 + utilities $1,200 = $30,300.
• NOI = EGI $28,500 − $30,300 = −$1,800.

Leveraged cash flow:

• Loan: 75% LTV on $500,000 = $375,000. At a 30‑year fixed near 6.1% from the Freddie Mac PMMS, monthly P&I is about $2,275, or $27,298 per year.
• Cash flow after debt = −$1,800 − $27,298 = −$29,098 per year.
• If you invested a $125,000 down payment plus about 3% in closing costs ($15,000), total cash in is roughly $140,000. Cash‑on‑cash ≈ −20.8%.

Takeaway: These are conservative, locally plausible inputs that produce negative cash flow. That outcome is common for Miami condos if HOA, taxes, and insurance are high relative to rent. This is why your association documents, insurance quotes, and tax estimates are mission critical.

Miami risks that move cash flow

• Milestone inspections and reserves: After Surfside, Florida changed condo laws, requiring milestone structural inspections for buildings 3+ stories at set ages and stronger reserve funding. Many associations have raised fees or levied special assessments. Read a legal overview of these reforms in this post‑Surfside condo law guide, and request the association’s inspection history and reserve study before you underwrite.
• HOA special assessments: Even a $10,000 assessment or a $200 to $400 monthly HOA increase can flip a deal from positive to negative. Ask for recent meeting minutes to see what might be coming.
• Insurance volatility: Florida’s market has been shifting. Review current trends at Citizens Property Insurance, then get quotes for the unit and confirm how the building’s master premium has changed year over year.
• STR permissions: Many buildings prohibit short-term rentals or set minimum lease terms. Municipalities also require permits. Start with Miami Beach’s requirements page and confirm your building’s bylaws.
• Flood exposure: Check FEMA zones and elevation in the Miami-Dade flood maps. Lenders generally require flood insurance in SFHAs.

Stress test your pro forma

Run conservative scenarios to protect your downside:

• Increase HOA by $200 to $400 per month and add a one-time special assessment line.
• Add 10% to 20% to insurance costs for the first renewal.
• Model mortgage rates 1.0% higher than today’s PMMS reading.
• Drop rent by 5% and increase vacancy to the high end of your range.
• For STR scenarios, cut occupancy to shoulder-season levels and add platform and higher cleaning/turn costs.

If your numbers still meet your target return under stress, you are closer to a durable deal.

Due diligence checklist before you buy

Ask for and review these items before you rely on any cash flow model:

• Association documents: declaration, bylaws, leasing policy, and amendments.
• Association budget, reserve study, and the last 3 years of financials and meeting minutes.
• Milestone inspection and recertification reports, plus any Phase 2 findings.
• Insurance: building master policy declarations and deductibles, and unit HO‑6 quotes. Review broader market context at Citizens Property Insurance.
• Property taxes and documentary stamps: review the Miami-Dade Tax Collector FAQs and estimate based on assessed value.
• Flood zone and requirements using the county flood maps.
• Rental performance: rent roll or prior leases if marketed as an income property.
• STR licensing rules if relevant, beginning with Miami Beach guidance.

Long-term vs short-term rentals

• Long-term rental (LTR): Simpler operations, steadier occupancy, lower management fees. Your key sensitivity is HOA and insurance relative to achievable rent.
• Short-term rental (STR): Potentially higher gross revenue in peak season, but higher operating costs, stricter legal requirements, and greater variability. You must confirm both municipal permits and association approval before you underwrite STR income.

Bottom line

In Miami, the math starts with rent but often ends with the HOA, insurance, and taxes. Use a clean framework, verify every building-specific input, and stress test for changes to HOA and rates. If you want help sourcing units with stronger fundamentals and navigating association and insurance diligence, our owner-led team is ready to work with you.

Looking for vetted Miami condo opportunities or a second set of eyes on your pro forma? Connect with Real Estate Connect for investor-focused guidance, from deal sourcing to property and asset management.

FAQs

What inputs do I need to analyze Miami condo cash flow?

• You need purchase price, realistic monthly rent from local comps, vacancy rate, HOA fees, property taxes, insurance, management, maintenance reserves, utilities, and the current 30‑year fixed rate from the Freddie Mac PMMS.

How do HOA fees affect Miami condo returns?

• HOA is often the largest expense after debt service, and Miami-Dade fees have risen; even a $200 to $400 per month change can flip your NOI, so review budgets, reserve studies, and this local HOA fee trend summary.

Are short-term rentals allowed in Miami Beach condos?

• It depends on zoning and your association’s rules; many buildings restrict STR and the city requires permits, so start with the Miami Beach STR requirements and verify your building’s leasing policy.

How can I estimate Miami-Dade condo property taxes?

• Use the Miami-Dade Tax Collector FAQs to understand rates and exemptions, then model 1.0% to 2.5% of assessed value as a range until you can verify the folio’s actual bill.

Do I need flood insurance for a Miami condo investment?

• If the building lies in a Special Flood Hazard Area, lenders typically require flood insurance; confirm the FEMA zone on the Miami-Dade flood maps and get quotes early.

What mortgage rate should I plug into my condo pro forma?

• Use the current weekly 30‑year fixed average from the Freddie Mac PMMS and add a buffer, since small rate changes can materially alter monthly P&I and cash flow.