The cap rate myth: why Miami investment math is different

Investors arriving from cities where six-cap deals are normal often misread the Miami market. The headline cap rates here look thin — typically 3.5-5.5% on residential — but that's not the return.

The actual return on a Miami investment property is land + capital appreciation + tax-advantaged depreciation + the option value of homestead conversion. Strip those out and yes, the cash yield is unattractive. Include them and the ten-year IRR consistently outpaces tertiary markets even after accounting for insurance and association costs.

The exception: anything north of forty stories built before 2010 with deferred reserve studies. We'll walk you through the cohort to avoid.