The 3 numbers that quietly kill a South Florida small multifamily deal

I underwrite a lot of small multifamily in South Florida (Miami-Dade, Broward, Palm Beach), and the same three lines sink more deals than the rehab budget ever does. None of them show up correctly on the broker's operating statement, so here they are.

1) The property tax reset. Florida reassesses when a building sells. The seller's bill reflects an old capped basis (10 percent a year cap on non-homestead), yours reflects the sale. On a lot of deals the tax line comes in at 150 to 200 percent of what the seller pays today. Pull the parcel millage and estimate the post-sale assessed value around 85 percent of price, then rebuild the line. Do not underwrite off the seller's number.

2) Insurance on older coastal buildings. FL pricing has been brutal since 2023, carriers pulled out, and a renewal on a long-held property does not reflect what a new buyer gets quoted. On a pre-1960 building without wind mitigation I floor it around $1,800 per unit per year and get a real quote before going hard. Flood zone matters too: X versus VE can be an 80 to 90 basis point swing on your cap rate.

3) DSCR at today's rates, not last year's. A deal that covered at 1.0 plus last year can sit under 1.0 now at the same price. Size the loan by the binding constraint, the min of LTV, DSCR at a stressed rate, and debt yield, and let the equity fall out of that. Do not back into it from an assumed down payment.

Run those three before you are under contract and a surprising number of deals change verdict. Curious what everyone else treats as the most-understated line on a South Florida OM. Insurance is my vote lately, but the tax reset is the one that catches first-time FL buyers off guard.