Rental yield in Florida: why 9% gross becomes 3% net

How is rental yield calculated?

Three numbers, and the difference between them is where investors lose money in Florida.

Gross yield is the number quoted in listings and in most market reports, because it needs only two inputs. It is also the number that makes Florida look like an easy market — and the gap between gross and net here is wider than in most of the country, for reasons that are specific to this state.

Which expenses does almost nobody subtract?

Insurance and property tax without the homestead cap. Together they can take a third of the gross rent before anything else is paid.

The full stack on a Florida rental:

• Property tax at the full rate. A rental gets no homestead exemption and no 3% assessment cap — the cap is 10%. On a $250,000 assessed home in Miami-Dade an investor pays about $4,623 a year against $3,846 for an owner-occupant, and from 2028 against $1,492 if the ballot measure passes. The gap between owning and renting out widens.
• Insurance. The most expensive in the country, and a landlord policy is not cheaper than a homeowner’s. Budget the actual ZIP, not a state average.
• HOA and CDD. Median $196 and $168 a month respectively in our catalogue of 940 Florida communities — $392 where both apply.
• Management, 8–12% of collected rent for long-term. More for short-term.
• Vacancy, 5–8% depending on the market and the season.
• Maintenance and capital reserve, at least 1% of value a year. In Florida the roof and the air conditioning both have shorter lives than the national assumption.

A worked example, gross to net

A $350,000 house in Broward renting for $2,800 a month looks like a 9.6% gross yield. Run the expenses and it is 3.1%.

Look at where the money goes. Tax and insurance alone are $11,965 — 36% of the gross rent, and more than the entire net operating income. In a state with cheaper insurance and a lower effective tax rate, that same property would net roughly double.

This is not an argument against Florida. It is an argument against buying on gross yield, and against using a national rental calculator that assumes national expense ratios.

Which areas actually yield the most?

Gross yields across South Florida ZIP codes range from about 2% to nearly 16% — a sevenfold spread inside one metro area.

Gross yield by ZIP code, ResiClub, May 2026. This is their published gross yield, calculated with their own inputs — dividing rent by price from another source will give a different number, which is why we publish theirs rather than mixing methodologies.

The pattern is the one you would expect and it is worth stating plainly: yield and appreciation trade against each other. The high-yield ZIP codes are condominium-heavy, older and further from the water. The 2% ZIP codes are Coral Gables and Pinecrest, where the return has historically come from the price of the asset rather than from the rent.

What is cash flow, and when does it go negative?

Cash flow is what is left after the mortgage. Net operating income pays the property’s bills; cash flow is what reaches your pocket — and at current rates it is negative more often than people expect.

Take the example above. Net operating income is $10,743. Finance $280,000 at 7% over 30 years — investment property rates run above owner-occupied — and the annual debt service is about $22,350.

Cash flow: −$11,600 a year. The property loses roughly $970 a month, and the investor is betting entirely on appreciation and on amortisation.

That is not automatically a bad deal, but it is a different deal from the one most people think they are making. Three ways the arithmetic changes:

• More down payment. At 40% down the same property is close to break-even.
• A cheaper property with the same rent. Which is what the high-yield ZIP codes are, before the HOA.
• Paying cash. Then your return is the 3.1% net yield, and the question becomes whether that beats what the money earns elsewhere.

Short-term or long-term rental?

Short-term can gross two to three times as much and costs far more to run — and in much of South Florida it is restricted or prohibited outright.

Cash or financed?

Cash gives you the net yield. Financing gives you leverage on appreciation, and at today’s rates it usually costs you monthly cash flow to get it.

The trade in one line: on our example, paying cash earns 3.1% on $350,000. Financing 80% turns that into a negative $11,600 a year of cash flow, in exchange for controlling the same asset with $70,000 of your own money.

Which is better depends entirely on what you believe about appreciation, and on whether you can carry the negative. Two things worth holding in view:

• Leverage multiplies both directions. On a $350,000 property with $70,000 down, a 10% price rise is a 50% return on your capital — and a 10% fall wipes out half of it.
• Cash buyers compete differently. In Florida a cash offer with a short inspection period beats a financed offer at the same price often enough to be worth several percent of the price.

What is a DSCR loan, and when does it make sense?

A loan underwritten on the property’s income rather than on yours. No tax returns, no debt-to-income ratio — the rent has to cover the payment.

DSCR stands for debt service coverage ratio: the property’s rental income divided by its total payment including taxes, insurance and HOA. Most lenders want 1.0 or above, and price better at 1.25.

Who it fits:

• Self-employed buyers whose tax returns understate their income.
• Investors with several properties who have run out of conventional slots.
• Foreign buyers without U.S. tax returns or credit history.

What it costs: a rate typically 1–2 points above a conventional investment loan, 20–25% down, and often a prepayment penalty in the first years. And note what the ratio does in Florida — because taxes and insurance sit inside the calculation, a high-insurance ZIP code can fail the DSCR test on a property that would pass elsewhere at the same rent. It is the same expense stack, showing up as a financing constraint.