Short-Term Rental Yield Analysis
Icon Brickell (W tower) · Residence 2303
485 Brickell Ave # 2303, Miami FL 33131 · 1 Bed / 1 Bath · 790 sq ft · Built 2009
$545,000WaterfrontBayBlueBay-managed building
STR revenue here is a real managed comp we run in this building — managed comp (two PMB-managed 1BR units in this tower), not a generic estimate.
| Managed 1BR in the same building — measured | Trailing 12 mo |
| Occupancy (owner-blocked nights included) | 72% |
| Average daily rate | $313 |
| Gross revenue measured — the base case | $82,400 |
Upside: both owners block the unit for their own stays; the ledger shows 72% booked. Released to a pure investor rental, those nights add about 20% of revenue. At ~87% that is $98,800 gross, the optimistic case (the same units with the owners' own stays released). Conservative case: booking income only, without cancellation fees and resolution payouts, $77,900.
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 $82,400.
| Gross STR revenue | $82,400 |
| Co-host operations, PMB (12%) | −$9,888 |
| HOA ($1,694 × 12) | −$20,328 |
| Property tax (est., see below) | −$10,900 |
| Insurance (condo, STR) | −$2,000 |
| Utilities + internet | −$2,640 |
| Supplies, turnover, reserves (~4%) | −$3,296 |
| Net operating income (NOI) | $33,348 |
Unlevered cap rate = $33,348 ÷ $545,000 = 6.1%.
The same $33,348 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) | $479,600 |
| Reclassified to 5, 7 and 15-year property by cost segregation (~20%): furniture, appliances, finishes, dedicated systems, share of the amenities | $95,920 |
| Building shell, 39 years straight-line (full year) | $9,838/yr |
| Year-1 bonus depreciation (100%, IRC §168(k)) | $95,920 |
| Federal tax saved at 37% | ≈ $35,490 |
| Year 1 | Following years | |
| Cash flow after mortgage ($436,000 @ 6.0%) | +$1,980 | +$1,980 |
| Principal paid down (equity) | +$5,208 | +$5,208 |
| Federal tax saved at 37% (rental loss: interest + depreciation − NOI) | +$32,831 | +$980 |
| Total return, before any appreciation | +$40,019 | +$8,168 |
| On the $125,350 cash in | +31.9% | +6.5% |
Without the tax effect the same unit returns +5.7% 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 28% of the $125,350 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) | −$125,350 |
| Year 1: cash flow after mortgage +$1,980, tax saved +$32,777 | +$34,756 |
| Year 2: cash flow after mortgage +$2,980, tax saved +$434 | +$3,414 |
| Year 3: cash flow after mortgage +$4,010, tax paid −$77 | +$3,934 |
| Year 4: cash flow after mortgage +$5,072, tax paid −$607 | +$4,465 |
| Year 5: cash flow after mortgage +$6,165, tax paid −$1,158 | +$5,007 |
| Sale year 5 at $631,804, less 7% costs ($44,226) | $587,578 |
| Mortgage paid off | −$405,717 |
| Tax on sale: furniture and equipment at their year-5 value (30% of cost) $10,647 at 37%, building depreciation $9,838 at 25%, capital gain $22,223 at 23.8% | −$42,708 |
| Net profit after tax over 5 years | $65,379 |
| Return after tax (IRR) · cash multiple | 11.0% · 1.52× |
| Same deal before tax, for comparison (IRR) | 10.4% |
| Same deal if value grows 5% a year instead of 3% (after-tax IRR · profit) | 16.5% · $110,570 |
| Exit through a §1031 exchange instead of a taxable sale: $32,061 of tax deferred into the next property (after-tax IRR · profit, +3% / +5%) | 15.0% · $97,440 21.2% · $156,745 |
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 $545,000. 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.