Miami 3-bed serviced apartment at $815,000 — does the rent justify the risk?

[porch.direct]

I’ve checked the obvious operating costs, but I still cannot tell whether the rent assumption and the building expenses belong in the same risk category. This is a three-bedroom serviced apartment in Miami priced at $815,000, with projected rent of $5,923 a month and a headline gross yield near 8.7%.

The calculation includes empty periods, management, normal upkeep and money for larger repairs. What remains unclear is whether property tax, insurance, building charges or frequent tenant turnover would do the most damage. A higher annual bill reduces the return every year, while an extra vacancy also removes income and may bring cleaning or furnishing costs.

I also want to test the property separately from the loan. If the unfinanced net return is already thin, favorable borrowing assumptions could disguise that; if the operating margin is sound, I can then see how less favorable financing changes the cash flow. Which written expense figures and occupancy assumptions would you obtain before deciding what net yield is adequate?

 

[liv_homes]

Insurance is the line I would stress hardest, followed by property tax based on the post-purchase position rather than the seller’s current bill. Also confirm whether the building charges can rise or whether special assessments are possible; a sound-looking building does not necessarily mean predictable ownership costs.

I’d run scenarios for both higher insurance and one extra vacancy period. If the deal only works at $5,923 every month, the 8.7% headline is doing too much work.

 

[esme.snow]

Before choosing a target net yield, what does “serviced” mean here? Is $5,923 a conventional monthly lease, or an average that assumes shorter stays and frequent turnover? Those produce very different cleaning, furnishing, utility and management exposure.

I’d also separate the property return from financing. First calculate net yield with no debt using written estimates for tax, insurance and building charges; then test the loan payment at less favorable terms. Otherwise a financing assumption can make a merely thin property look attractive.