🏢 Broward 4-Unit Deal — Worth It?

[Damian Gonzalez]

Came across an interesting small multifamily deal in Broward and wanted to get some opinions.

• Price: $599K

• Property: 2-story, 4-unit (all studios)

• Size: <1,900 sq ft (no 40-year recert)

• Zoning: Commercial (on a prime street)

• Meters: Separate electric, 1 water

Current setup:

• 2 units rented at $1,400

• 2 units month-to-month, need light rehab

Stabilized potential:

• ~$5,600/month ($67K/year gross)

🤔 My Thoughts

• Light value-add → quick stabilization

• No recert = big long-term savings

• Commercial zoning adds upside (redevelopment / flexibility)

• Simple unit mix (studios, lower overhead)

❓Questions for the group

1. Would you move forward at $599K or push for a discount?

2. What cap rate would you need here in Broward to feel comfortable?

3. How much are you budgeting for light rehab per studio in today’s market?

4. Does the commercial zoning add real value to you, or is it just a bonus?

5. Would you hold long-term or treat this as a quick stabilize + refi play?

💡 Goal

Looking at this as a stabilize + refinance + hold deal, but want to sanity check numbers and risk before moving forward.

[Eric Davis]

Quote from @Damian Gonzalez:

Quote from @Eric Davis:

Hello Damian, Good deal to analyze — let me run through your questions with some numbers.

Price / Discount: At $599K with $67.2K stabilized gross, you're at about an 8.9x GRM. For Broward small multifamily that's market-ish, but I'd want to back into it from NOI. My quick expense estimate:

• Property taxes: ~$11K (Broward millage on $599K, non-homestead)
• Insurance: $8-12K (this is the wild card in FL right now — get a quote before you go hard on this, FL multifamily insurance has been brutal the last 2 years)
• Water/sewer (you're paying it on 1 meter): ~$2,800/yr for 4 studios
• Management (budget it even if self-managing): ~$5,400 at 8%
• Maintenance/repairs: ~$3,500
• Vacancy/credit loss: ~$3,400 (5%)
• Reserves: $1,000

That puts total expenses around $35-39K, so your NOI lands somewhere in the $28-32K range. At $599K that's roughly a 4.7-5.3% cap rate. For a value-add small multifamily in Broward, I'd personally want to be closer to 6% stabilized, which would put my offer around $500-530K. The 2 vacant units and rehab needed gives you leverage to negotiate — the seller isn't getting $5,600/month today, they're getting $2,800.

Cap rate comfort: I'd target 5.5-6% stabilized for this profile in Broward. Below 5% and your DSCR gets uncomfortably tight at today's rates. Speaking of which — at a 75% LTV on $599K with a 7% rate (30yr am), your annual debt service is roughly $35,800. With $30K NOI that's a 0.84x DSCR, which means this deal doesn't debt service at asking price without a bigger down payment or a lower purchase price. That alone tells you the price needs to come down, or you need to put 35%+ down.

Rehab budget: For light studio rehab in South FL right now — paint, LVP flooring, updated fixtures, maybe a kitchenette refresh — I'd budget $6-8K per unit if truly light. If you're touching cabinets or bathroom tile, $10-12K. Studios are nice because the scope is small, but material and labor costs in Broward aren't cheap. So $12-16K total for 2 units is a reasonable placeholder, but walk them with a contractor before you commit to a number.

Commercial zoning: That's real value, not just a bonus. It gives you optionality — you could potentially convert to short-term rentals (check local STR regs), add a small commercial component at street level, or sell to a developer down the road at a premium since the zoning is already in place. On a "prime street" in Broward, commercial zoning on a small lot is genuinely worth something to the right buyer. I'd make sure your hold thesis accounts for that upside but don't pay for it today — price it off the residential income.

Hold vs. stabilize + refi: The BRRRR math is tight here. If you buy at $599K and put $15K into rehab, you're all-in around $614K. For a cash-out refi at 75% LTV, the property needs to appraise at ~$819K to get all your cash back. At a 5.5% cap that implies ~$45K NOI, which is well above what this property will produce. So realistically you're leaving cash in the deal on a refi — which is fine if the cash flow works, but this isn't a full-recycle BRRRR. I'd frame it as a stabilize + refi + hold for cash flow and long-term appreciation, with the commercial zoning as your upside kicker if the corridor develops.

Bottom line — like the bones of the deal and the zoning optionality, but the asking price doesn't work at today's rates without significant equity. I'd go in around $510-530K and see where the seller lands.

 why is your insurance so high? I have another 4plex in Miami triple this size in a flood zone and pay 6k. This property is only 1700 square feet. I think you ran your expenses too high. 

Fair point — and honestly, if you're getting $6K on a larger 4-plex in a flood zone in Miami, that's a great rate. Hold onto that policy.

That said, a few things to consider:

1. Your $6K may not be replicable on a new acquisition. FL insurance pricing has been all over the place since 2023 — several carriers pulled out of the market entirely, and new policies are pricing significantly higher than renewals on existing books. What you're paying on a property you've held may not reflect what a new buyer gets quoted today.

2. Commercial zoning changes the underwriting. This property is zoned commercial, and some carriers treat that differently than residential multifamily — especially for liability coverage. That can bump premiums.

3. Wind vs. flood. Flood zone is actually the more predictable cost (NFIP rates are standardized). It's the wind/hurricane coverage that's been the real cost driver in South FL. A 1,700 SF building on a "prime street" in Broward — depending on the age, roof type, and wind mitigation features — could see wide variance.

4. I intentionally ran expenses conservatively. On a deal analysis for a stranger on the internet, I'd rather be $2K high on insurance and have the deal still work than be $2K low and have someone close on a deal that doesn't cash flow. If you get a quote at $5-6K, that's pure upside — your NOI jumps to $32-35K and the deal math looks better.

The bigger issue from my analysis wasn't really the insurance — it was the DSCR at asking price. Even if you cut insurance to $6K, your NOI goes to maybe $34K against $35.8K in debt service at 75% LTV / 7%. That's still under 1.0x DSCR. The price needs to come down regardless, or you need to structure the financing differently.

Get an actual insurance quote and plug it in — that'll tighten up the numbers. But I'd still negotiate hard on price. The seller's only collecting $2,800/month, not $5,600.