Every Miami income-property package I get sent leads with the same number. Big font, top right corner: 5.75% CAP. It's the number buyers anchor to, the number sellers price to, and — in this market specifically — the number least likely to describe what you'll actually own.
Not because anyone is lying. The math on the page usually checks out. It's that a Miami cap rate is built on three inputs that behave differently here than almost anywhere else in the country: a property tax bill that resets the moment you close, an insurance line that can move thirty percent in either direction, and a cost of debt that is currently higher than the yield on the asset.
That last one is the part most people haven't fully absorbed. Let's start there, because it changes what a "good deal" even means in 2026.
Where the market actually is right now
Set the table with real numbers before we argue about anything:
Rents are flat, not falling. Yardi Matrix put average advertised asking rent across South Florida at $2,526, up 0.2% on a trailing three-month basis through April 2026 — against a U.S. average of $1,758. Flat, but flat at a high absolute number.
Occupancy slipped slightly. Stabilized occupancy was 95% as of March, down 50 basis points year over year.
Supply is still landing. 2,649 units delivered through April — 0.7% of existing stock, 20 basis points above the national rate.
Deal volume thinned. $894 million in transactions in the first four months of 2026, versus roughly $1 billion over the same stretch of 2025.
Pricing held. South Florida multifamily cap rates have sat near 5.0% through 2026, and CBRE's H1 2026 Cap Rate Survey actually found Miami among a small group of markets where going-in cap rates compressed for core assets — even as the same survey recorded its most bearish sentiment on infill multifamily generally.
Read that last bullet twice. Values are holding while conviction is falling. That combination is what produces a market where properties are priced correctly on paper and still don't pencil for the buyer standing in front of them.
Problem one: leverage is working against you
As of late August 2026, agency and bank multifamily debt is quoting roughly 5.7% to 6.5% depending on size, term and sponsor, with the 10-year Treasury hovering near 4.7%. Put a 6.2% coupon on a 30-year amortization and your debt constant — the actual annual cash cost of the loan as a percentage of the loan — lands around 7.35%.
Now put that next to a 5% going-in cap rate.
💡 This is negative leverage, and it is the defining condition of Miami multifamily right now. Every dollar you borrow costs about 7.35 cents a year and buys you an asset yielding about 5.1 cents. Borrowing more doesn't amplify your return — it reduces it. For fifteen years, the entire playbook was "add leverage, boost returns." That playbook has been inverted, and a lot of pro formas still haven't noticed.
Which means the questions that mattered in 2019 — how do I get to 75% LTV, how do I maximize proceeds — are now roughly the opposite of the questions that matter.
Problem two: the tax bill you're shown is the one that's about to die
This is the single most expensive mistake I see out-of-state investors make in Miami, and it's structural to Florida, not a quirk of any one deal.
Florida gives non-homesteaded property a 10% annual cap on assessed-value increases (it doesn't apply to the school-board portion). Over a long hold in an appreciating market, that cap drifts the assessed value far below actual market value. A seller who has owned an Edgewater or Little Havana building since 2014 may be paying tax on an assessed value less than half of what you're about to pay for it.
A change of ownership resets that base year. The property gets reassessed at just value the year following the sale. The seller's tax line — the one printed in the operating statement you were handed — expires with the closing.
What that does to a real deal
Here's a 12-unit building at $3.6 million ($300,000 a door), average rent $2,200, 5% vacancy and credit loss. Combined Miami-Dade millage runs roughly 18 to 21 mills depending on municipality; I'll use 20. Florida assesses just value net of costs of sale, so I'm carrying assessed value at about 85% of the purchase price.
Effective gross income — As presented (seller's taxes): $300,960 · As underwritten (post-reset): $300,960
Property taxes — As presented (seller's taxes): $38,000 · As underwritten (post-reset): $61,200
Insurance (12 × $1,400) — As presented (seller's taxes): $16,800 · As underwritten (post-reset): $16,800
Utilities, R&M, mgmt, reserves — As presented (seller's taxes): $39,048 · As underwritten (post-reset): $39,048
Net operating income — As presented (seller's taxes): $207,112 · As underwritten (post-reset): $183,912
Cap rate on $3.6M — As presented (seller's taxes): 5.75% · As underwritten (post-reset): 5.11%
Sixty-four basis points, gone, on a line item that was never in question — it was simply going to happen on a schedule the offering memorandum didn't mention.
And capitalize it: $23,200 of permanently lost NOI, at that 5.11% cap, is roughly $454,000 of value on a $3.6 million building. That's 12.6% of the purchase price, sitting inside one line of the tax roll.
Then it hits your financing
At 65% LTV — a $2.34 million loan at 6.2% over 30 years, about $171,981 of annual debt service — the two versions of this deal are not variations on a theme. They're different transactions:
Debt service coverage: 1.20x on the presented numbers. 1.07x on the real ones. Most lenders want 1.25x. The second version doesn't get the loan it was underwritten with.
Cash-on-cash: 2.79% becomes 0.95%. You've committed $1.26 million of equity to earn less than a money-market account.
What actually clears: to hit 1.25x you're capped around a $2.0 million loan — 55.6% LTV. So you need roughly $340,000 more equity than you planned, to buy a deal that just got worse.
Run it the other way and you get the honest answer on price: for this building to support a 1.25x coverage ratio at 65% leverage, it needs to trade around $3.08 million — about 14.5% below ask, a 5.97% cap on real expenses. That's not a lowball. That's arithmetic.
Problem three: insurance is a range, not a line item
Insurance gets the headlines, and the news is genuinely better than it was. Newmark tracked multifamily premiums peaking at roughly $2,000 per unit in 2023, then falling by about half to $1,000. Carriers that fled Florida at the peak have come back and are cutting to win share. Nationally, PwC put average multifamily property insurance at $68 per unit per month in 2024, up from $39 in 2019 — elevated, but no longer vertical.
Two things keep it from being a solved problem here:
Deductibles went the other way. Average deductibles rose about 22% in 2025. Lower premium with a materially higher retention isn't the same as cheaper risk — it's risk you now hold yourself.
The softening is not evenly distributed. Hardened, newer, or substantially renovated assets are seeing double-digit reductions. Older Class B and C stock with unremediated aluminum wiring, stab-lock breakers or an aged roof is still getting punished — and much of Miami's small-multifamily inventory is exactly that vintage. Insurers also revalued Florida properties that had been carried 20–30% below replacement cost, which raised premiums on paper even where rates fell.
Here's the part that surprised me when I ran it: on that same 12-unit deal, a 30% insurance swing moves value about $99,000, roughly 2.7% of the purchase price. Real money. But it's less than a quarter of what the tax reset does. The volatile expense everyone worries about is smaller than the certain expense almost nobody models.
🔑 The practical rule: get a real, bindable insurance quote on your ownership structure and deductible before you release your inspection contingency — not the seller's renewal, not a broker's estimate. And underwrite taxes off your purchase price, not the tax roll. One of those two numbers is knowable with certainty and one isn't, and most buyers get that backwards.
What actually makes a Miami deal work in this environment
Underwrite the going-in yield, then decide about debt separately
In a negative-leverage market, the unlevered yield on real expenses is the honest measure of the asset. If that number doesn't stand on its own, no capital-stack cleverness fixes it — leverage only makes a mediocre yield worse. Decide whether you want the building at 5.11% unlevered, and treat financing as a separate question about liquidity and timing.
Assumable debt is worth a premium — quantify it
A seller carrying a 3.5% agency loan with assumability is offering something no lender will sell you today. That's not a soft benefit; price it. The gap between an assumed low-coupon loan and today's 6.2% coupon, on a $2.3 million balance, is real annual cash flow — and it's frequently worth more than the price concession buyers spend their energy fighting for.
The rent gap is in workforce, not Class A
Miami's rent picture is bifurcated: new Class A product, absorbing 2,649 units of fresh supply, is where the concessions and flat-to-negative growth live. Older workforce inventory has been the firmer half. If your thesis is "buy at 5%, push rents 8%," the assets where that's plausible are generally not the shiny ones — which is inconvenient, because those are also the ones the insurance market is hardest on. That tension is the deal. Price it honestly.
Treat capex as insurability, not cosmetics
Roof, wiring, breakers, windows. In this market those items don't just reduce maintenance — they change your premium, your deductible, your coverage limits, and by extension your NOI and your exit cap. A renovation budget that upgrades kitchens while leaving 1970s wiring in place is optimizing the wrong line.
If you already own income property in Miami, read this backwards
Everything above describes the lens a serious buyer is applying to your building right now. Which means a few things are true about your position that weren't true three years ago.
Your low, long-capped tax basis is worth real money — to you, not to a buyer. It doesn't transfer, and any buyer paying attention is deducting it from what they'll pay. Meanwhile a documented, recent, bindable insurance quote on a hardened building is one of the few things that genuinely raises your price, because it removes the biggest unknown from the buyer's model.
And if you're financed at a coupon that starts with a 3, and that loan is assumable, you are holding an asset that is worth more than the comps suggest — and most owners in that position have no idea, because their broker priced them off a cap rate and never opened the loan documents.
What I actually think
I don't read this market as broken. Rents are stable at a genuinely high absolute level, occupancy is 95%, employment is growing, the supply wave is largely delivered, and CBRE's surveyors are marking Miami as a compression market while they're bearish on infill multifamily nationally. That's a market with real fundamentals underneath a difficult financing environment — not the other way around.
But the era where you could buy a Miami building at the asking cap rate, lever it to 75%, and let the spread do the work is over for now. What replaces it is slower and much more specific: honest expenses, less debt, more equity, and a going-in yield that has to justify itself before any financing structure touches it.
The buyers who do well over the next two years won't be the ones who found a hidden gem. They'll be the ones who underwrote the tax reset, bought the insurance quote before the inspection period closed, and were willing to say no to the 5.75% that was really a 5.11%.
Looking at a Miami income property? Send me the address or the OM and I'll rebuild the underwriting — reset taxes off your actual purchase price at the correct millage, real insurance ranges for that vintage and construction type, current debt quotes, and what the deal does at the leverage a lender will actually give you. If it doesn't work, I'd rather tell you before your deposit goes hard.
Already own one? 🏷️ I'll run the reverse: what your building is worth to a buyer applying this math today, what your assumable debt is worth on top of that, and which two or three items would move your number most before you list. No listing pitch — just the analysis.
👉 Message me on WhatsApp | ✉️ silvana@carvalhoresidences.com
Frequently Asked Questions
What is a good cap rate for Miami multifamily in 2026?
South Florida multifamily cap rates have held near 5.0% through 2026, and CBRE's H1 2026 Cap Rate Survey identified Miami as one of a small number of markets where going-in cap rates compressed for core assets. The more useful question is whether the quoted cap rate reflects post-closing expenses. Because Florida reassesses non-homesteaded property at just value the year after a sale, a cap rate calculated on the seller's tax bill can overstate the real yield by 50 to 75 basis points or more on a long-held building.
What is negative leverage and why does it matter in Miami right now?
Negative leverage occurs when the annual cash cost of debt exceeds the property's going-in cap rate. With agency and bank multifamily debt quoting roughly 5.7% to 6.5% in August 2026 — a debt constant near 7.35% on a 6.2% loan amortized over 30 years — and South Florida cap rates near 5%, borrowed dollars currently cost more than the asset yields. Adding leverage reduces cash-on-cash return rather than increasing it, which reverses the standard playbook of the prior decade.
Do Florida property taxes go up when you buy an investment property?
Yes. Non-homesteaded property in Florida carries a 10% annual cap on assessed-value increases, which does not apply to the school-board portion. That cap builds up a gap between assessed and market value over a long hold. A change of ownership resets the base year, and the property is reassessed at just value the year following the sale. On a building held for a decade in an appreciating submarket, that reset can add tens of thousands of dollars in annual expense — and should be modeled off your purchase price, not the seller's operating statement.
How much is multifamily insurance per unit in Miami?
Multifamily insurance premiums peaked nationally around $2,000 per unit in 2023 and have since fallen by roughly half, to about $1,000 per unit, as carriers returned to Florida and competed on price. Miami coastal and older assets typically price above that average. Two caveats matter: average deductibles rose about 22% in 2025, so lower premiums often come with materially more retained risk, and the softening is concentrated in newer or "hardened" buildings — older Class B and C stock with aluminum wiring, stab-lock breakers or aged roofs continues to face underwriting pressure.
Should I use less leverage on a Miami apartment building in 2026?
Often, yes — and sometimes the lender decides for you. In the worked example above, a 12-unit building underwritten on post-reset expenses produced a 1.07x debt service coverage ratio at 65% LTV, below the 1.25x most lenders require. Sizing the loan to a 1.25x coverage ratio capped it near 55.6% LTV, requiring roughly $340,000 in additional equity. In a negative-leverage environment, lower leverage improves cash-on-cash return, so the constraint and the strategy point the same direction.
Is assumable debt worth paying more for?
Frequently, yes. A seller carrying an assumable agency loan at a 3-handle coupon is offering financing no lender will originate today. On a $2.3 million balance, the annual cash-flow difference between an assumed low-coupon loan and a current 6.2% coupon is substantial, and often exceeds the price concession a buyer would otherwise negotiate. It should be quantified explicitly in the underwriting rather than treated as a qualitative advantage.
Rates, millage and insurance pricing move constantly, and every building underwrites differently. If you're reading this later, send me the property and I'll rebuild the numbers with current debt quotes and current tax and insurance assumptions. 🔑
Sources: Yardi Matrix, "Miami Multifamily Market Report – June 2026" (South Florida average advertised asking rent $2,526, +0.2% trailing three months through April 2026; U.S. average $1,758; stabilized occupancy 95% as of March, −50 bps YoY; 2,649 units delivered through April, 0.7% of stock; $894 million in transactions through April vs. ~$1 billion in the same period of 2025; Miami employment +0.8% in 2025; metro unemployment 3.8% as of February). CBRE, "U.S. Cap Rate Survey H1 2026" (cap rates broadly flat; 10-year Treasury peak of 4.67%; Miami among markets recording going-in cap rate compression for core assets; most bearish sentiment recorded for infill multifamily). South Florida multifamily cap rates near 5.0% in 2026 and multifamily debt quoted at approximately 5.7%–6.5% as of August 21, 2026, per lender rate sheets and market commentary; 10-year Treasury approximately 4.7% in mid-August 2026. Insurance figures per Multi-Housing News, "Why Insurance Costs Are No Longer High All Over," January 2026 (Newmark: premiums peaked at ~$2,000/unit in 2023, since roughly halved to ~$1,000/unit; average deductibles +22% in 2025; PwC: average multifamily property insurance $39/unit/month in 2019 rising to $68/unit/month in 2024; Florida properties revalued from 20–30% below replacement cost). Florida non-homestead 10% assessment cap and reassessment at just value the year following a change of ownership per the Miami-Dade County Property Appraiser; combined Miami-Dade millage of approximately 18–21 mills varies by municipality. The 12-unit example is an illustrative model built by me using the assumptions stated in the article — 20 mills, assessed value at 85% of purchase price, 5% vacancy and credit loss, $1,400 per unit insurance, 6.2% interest on a 30-year amortization — not an actual transaction. Figures are for general information only and are not investment, tax or legal advice, an appraisal, or a valuation of any specific property. Verify millage, assessment methodology and insurance pricing for your specific property with the appropriate professionals.
