Short-Term Rental Yield Analysis
The Elser Hotel & Residences · Residence 4417
398 NE 5th St # 4417, Miami FL 33132 · 2 Bed / 3 Bath · 1,043 sq ft · Built 2022
$1,180,000WaterfrontBay
STR revenue here is measured, not projected: a comparable 2BR we manage at District 225, rental income March to August 2026 annualized (QuickBooks, excluding tax collected), three blocks away; likely conservative for this larger 2BR + den. The scenarios below bracket it.
| STR revenue basis (a comparable 2BR we manage at District 225, rental income March to August 2026 annualized (QuickBooks, excluding tax collected), three blocks away; likely conservative for this larger 2BR + den) | |
| Gross annual revenue — base case | $83,500 |
Owner-operated short-term rental: you run pricing, guest messages and the listing, PMB (Property Management Brickell) runs cleaning, maintenance and check-ins. Base revenue $83,500.
| Gross STR revenue | $83,500 |
| Co-host operations, PMB (12%) | −$10,020 |
| HOA ($1,554 × 12) | −$18,648 |
| Property tax (est., see below) | −$23,600 |
| Insurance (condo, STR) | −$2,000 |
| Utilities + internet | −$2,640 |
| Supplies, turnover, reserves (~4%) | −$3,340 |
| Net operating income (NOI) | $23,252 |
Unlevered cap rate = $23,252 ÷ $1,180,000 = 2.0%.
The same $23,252 NOI, two ways to own it.
Held as a short-term rental with stays of 7 days or less on average, and with you materially participating, the first-year depreciation offsets your other income. Estimate, to be confirmed by a cost segregation study and your CPA.
| Depreciable basis (price less ~12% land share) | $1,038,400 |
| Reclassified to 5, 7 and 15-year property by cost segregation (~25%): furniture, appliances, finishes, dedicated systems, share of the amenities | $259,600 |
| Building shell, 39 years straight-line (full year) | $19,969/yr |
| Year-1 bonus depreciation (100%, IRC §168(k)) | $259,600 |
| Federal tax saved at 37% | ≈ $96,052 |
| Year 1 | Following years | |
| Cash flow after mortgage ($944,000 @ 6.0%) | −$44,665 | −$44,665 |
| Principal paid down (equity) | +$11,277 | +$11,277 |
| Federal tax saved at 37% (rental loss: interest + depreciation − NOI) | +$108,406 | +$19,742 |
| Total return, before any appreciation | +$75,018 | −$13,646 |
| On the $271,400 cash in | +27.6% | −5.0% |
Without the tax effect the same unit returns −12.3% a year on the cash in. Year 1 assumes the unit is placed in service late in the year, so the shell starts depreciating the following year. That is about 35% of the $271,400 cash in on the 20%-down case, back in year one: depreciation runs on the full price, mortgage included. Conditions: closed and bookable before 31 December for this tax year; average stay of 7 days or less; more hours than anyone else on the unit, logged (you on pricing and guests, the PMB co-host team on operations); no more than 14 days of personal use. The deduction is recaptured on sale unless you hold, exchange under §1031 or pass it on. How the Miami STR tax strategy works.
80% financed at 6% over 30 years. Rents, charges and value grow 3% / 3% a year (assumptions, not a forecast). Sold at the end of year 5 with 7% selling costs; the depreciation taken is recaptured on sale.
| Cash in at closing (20% down + ~3% closing) | −$271,400 |
| Year 1: cash flow after mortgage −$44,665, tax saved +$108,289 | +$63,624 |
| Year 2: cash flow after mortgage −$43,968, tax saved +$19,103 | −$24,865 |
| Year 3: cash flow after mortgage −$43,249, tax saved +$18,556 | −$24,693 |
| Year 4: cash flow after mortgage −$42,509, tax saved +$17,984 | −$24,525 |
| Year 5: cash flow after mortgage −$41,747, tax saved +$17,386 | −$24,361 |
| Sale year 5 at $1,367,943, less 7% costs ($95,756) | $1,272,187 |
| Mortgage paid off | −$878,433 |
| Tax on sale: furniture and equipment at their year-5 value (30% of cost) $28,816 at 37%, building depreciation $19,969 at 25%, capital gain $56,765 at 23.8% | −$105,550 |
| Net profit after tax over 5 years | −$18,015 |
| Return after tax (IRR) · cash multiple | -1.5% · 0.93× |
| Same deal before tax, for comparison (IRR) | -5.8% |
| Same deal if value grows 5% a year instead of 3% (after-tax IRR · profit) | 5.7% · $79,829 |
| Exit through a §1031 exchange instead of a taxable sale: $76,734 of tax deferred into the next property (after-tax IRR · profit, +3% / +5%) | 4.3% · $58,719 11.9% · $187,123 |
Why it beats the pre-tax figure: the deduction comes back in year 1 at 37%, and at sale most of it is taxed again only as real estate gain (25% and 23.8%), five years later. The sale-price allocation to furniture and equipment is set with your CPA; a lower value moves more of the gain to the capital rates. In a §1031 exchange the whole real-estate tax (building recapture and capital gain) rolls into the replacement property, bought within 180 days through a qualified intermediary; the furniture and equipment share stays taxable, since personal property no longer qualifies (2018 law). Holding until death steps the basis up and erases the deferred tax. Not tax advice; your CPA confirms the numbers for your return.
Same $1,180,000. Only the STR revenue assumption changes (cap = NOI ÷ price).
I'll walk you through STR set-up, financing options, and run the live numbers for this unit.