Why multifamily is the asset class South Florida investors keep coming back to

Through every cycle — 2008’s reset, 2020’s stress test, 2022’s rate shock — multifamily in South Florida has done one thing better than every other CRE asset class: it has stayed liquid. Tenants kept paying. Banks kept lending. Buyers kept showing up at trustee sales. That’s not luck — it’s structural.

South Florida sits on three pillars no other US metro has stacked together: net inbound migration that is still positive after 15 years, a service-tenant base that doesn’t telecommute out of the apartment market, and a permanent shortage of developable land caused by the Atlantic on one side and the Everglades on the other. Rents dipped briefly during 2020–21 and were reclaimed within 18 months. They’ve been climbing since.

But “multifamily in South Florida” is one of the most over-pitched, under-underwritten investment narratives in commercial real estate. The deals that look great on a sponsor’s deck are usually the ones being sold by someone who already extracted the alpha. The deals that quietly produce 15%+ IRRs over a 5-year hold are the ones nobody is talking about — because nobody is supposed to.

This post is the underwriting framework I use with my own multifamily buyers. It’s the difference between buying a return story and buying a real return.

The four multifamily plays in South Florida — and which one is right for you

Multifamily is a continuum, not a single strategy. Where you sit on it changes everything about your underwriting, your debt structure, and your hold period.

1. Small multifamily (2–4 units: duplex, triplex, quadruplex)
The entry point. Residential financing eligibility (FHA, conventional 25% down) makes these accessible to first-time CRE investors. Cap rates in South Florida range 5.5–7%. Risk concentration is high — one vacancy is 25–50% of your income. Best as house-hack or as the first rung on a buy-and-hold ladder.

2. Mid-market (5–49 units)
The CRE broker’s sweet spot, and where the most underpriced deals in South Florida currently sit. Commercial debt (regional banks, credit unions, life co), 65–75% LTV, DSCR 1.20–1.30 underwriting. Cap rates 6–8% depending on submarket and condition. This is where I source the highest-IRR opportunities for value-add investors.

3. Mid-large (50–150 units)
Institutional-light. Agency debt (Fannie/Freddie), LP capital common, professional property management mandatory. Cap rates 5–6.5% for stabilized, 6.5–7.5% for value-add. Family-office territory.

4. Institutional (150+ units)
REIT and pension-fund territory. Cap rates 4.5–5.5% stabilized, 5.5–6.5% value-add. South Florida sees regular institutional rotation as funds rebalance — but most individual investors should not try to compete here. Cap rate compression has reduced returns to bond-like.

For most of my investor clients, the right entry is 5–49 units in a tertiary submarket with operational upside. That’s where you can still find broken-but-fixable assets at 7%+ caps with 12–18 months of repositioning runway.

The seven underwriting questions most multifamily offering memorandums won’t answer for you

Multifamily OMs in South Florida are notoriously aggressive. Sponsors push T-12 NOI projected forward as if the next 12 months will look like the last 3. Here’s what I make sure my buyers ask:

1. What is the actual T-12 NOI vs. the proforma NOI — and what’s the gap built on?
A sponsor projecting NOI growth from $480k (T-12) to $640k (Year 1) is asking you to underwrite to ~33% growth. That requires either (a) significant rent increases, (b) major expense reductions, or (c) lease-up of vacant units. Make them show you which lever, line by line. Gaps over 15% deserve hostile scrutiny.

2. What’s the unit-by-unit rent roll — in-place rents, market rents, and lease expiration dates?
A property stabilized at 95% looks identical on a summary as a deal where 60% of leases roll inside 12 months at rents 22% above current. The first is a coupon clip. The second is a value-add deal disguised as core. The rent roll separates them.

3. What does operating expense actually look like vs. South Florida benchmarks?

• Property tax — Florida reassesses on transfer. If the seller’s current basis is half the purchase price, your Year-1 tax bill could be 80% higher than what’s in the OM. This is the single biggest “surprise” in South Florida multifamily underwriting.
• Insurance — has tripled at many properties since 2020. If the OM uses last year’s premium, you’re already underwater on Year 1.
• Repairs & maintenance — sponsors often run these at $300–500/door annually. Realistic for a stabilized older property is $700–1,200/door.

4. What’s the property’s true CapEx need over the hold period?
Roofs (Florida is brutal on roofs — 15–20 year replacement is realistic, not 30), HVAC, plumbing, balcony rehab, pool resurfacing, parking restripe. Most sponsors line-item $1,500–2,500/door for “capital reserves.” For most South Florida multifamily over 25 years old, the real number is $4,000–7,000/door over a 5-year hold.

5. Is this property in a flood zone, wind-prone zone, or in a special insurance-difficulty pocket?
South Florida insurance markets are fractured by ZIP code. A 1980s coastal property in Miami Beach can be near-uninsurable. A similar property 4 miles inland in Doral can be insured at 40% of the cost. The OM almost never breaks this out. (See the Florida Office of Insurance Regulation for current carrier filings.)

6. What is the actual rent growth pace — by submarket, not city-wide?
“Miami rent growth” is a meaningless statistic. Aventura is not Hialeah. Doral is not Liberty City. A stabilized 4-cap deal in a submarket where rents are growing at 1.5% per year is a bad deal. A 7-cap deal in a submarket growing at 6% with strong job formation is a great deal. Pull rent growth at the ZIP-code level, not the metro level.

7. What’s the assumable debt situation — and what’s your basis-to-replacement-cost ratio?
Most multifamily deals from 2019–2022 carry attractive assumable agency debt. Some sellers underprice their assets specifically to facilitate the assumption — that’s an opportunity. Conversely, properties bought at $250k/door against $310k/door replacement cost have built-in asymmetric upside. Always calculate this ratio.

Three South Florida multifamily submarkets I’m watching closely right now

Pompano Beach / Margate corridor — 1980s-era Class B/C garden-style properties trading at 6.5–7.5% caps with sponsor exits creating opportunities. Strong renter demand from residents priced out of Fort Lauderdale and Pompano Beach proper.

West Hialeah / Hialeah Gardens — Hispanic-market workforce housing with 95%+ historical occupancy, in-place rents 15–20% below market because of long-tenured residents, and limited new-supply pressure due to land scarcity.

West Boynton Beach — Population growth from West Palm Beach overflow and Boca-area gentrification pushing renters inland. 1990s–2000s-era assets with mark-to-market upside on lease turnover.

The three mistakes I see multifamily investors make most often

1. Underwriting to the sponsor’s pro-forma instead of building your own from the rent roll. The pro-forma is a sales document. The rent roll is the truth.
2. Ignoring the post-acquisition tax reset. I’ve watched investors lose 80–150 bps of going-in yield because they didn’t model the Florida property-tax reassessment correctly. Florida is not California — your basis IS the trigger.
3. Buying in a submarket they don’t visit. South Florida multifamily comes apart at the ZIP-code level. Driving the property at 6 PM on a weekday tells you 80% of what a $50k phase-one report won’t.

Why work with me on multifamily in South Florida

I broker multifamily acquisitions, dispositions, and 1031 exchanges across Miami-Dade, Broward, and Palm Beach. Investor clients work with me for three reasons:

• I underwrite from the rent roll up — not the pro-forma down. The numbers I show you are the numbers I’d accept if I were the buyer.
• My off-market deal flow is deep on 5–49 unit assets. This is the segment most listing brokers ignore because the commission per deal is smaller. It’s also where the highest unlevered IRRs are hiding.
• I tell you which submarkets I wouldn’t buy in personally. That’s a service some brokers can’t afford to provide. I can — because honest dealflow drives repeat investor relationships.

If you’re underwriting a multifamily deal in South Florida — your first or your fifth — I’d rather help you walk away from a deal with hidden risk than help you close a story that disappoints in year three.

Get in touch
Igor Presman — South Florida Commercial Real Estate Broker
Email: sales@igorpresman.com · Phone: 312-405-5400
$32M+ closed CRE volume · 46+ commercial transactions · 123 investors served
Serving Miami-Dade, Broward, and Palm Beach counties