How to analyze a small multifamily deal in South Florida.

Start with the building's real income

Every listing for a 2–12 unit building comes with a one-page pro forma. Treat it as the seller's opening argument. Your analysis starts with three documents: the current rent roll (unit, tenant, rent, deposit, lease start and end), the T-12 (trailing twelve months of actual income and expenses) and the leases themselves. If the seller "doesn't have" a T-12, build one from bank statements and the Schedule E on their tax return — or price the deal as if the real numbers are worse than claimed, because they usually are.

From the rent roll, compute gross potential rent (every unit at its current rent, twelve months), then subtract a realistic vacancy and credit loss. Five percent is a floor for a well-run building in Broward; use 7–10% for Class C or anything with a turnover-heavy history. Add other income only if it's documented: laundry, parking, pet rent, late fees.

Then the expenses sellers get wrong on purpose

1. Property taxes reset when you buy

Florida caps assessed-value increases on non-homestead property at 10% per year — until it sells. Then the assessment resets to market value, which in practice means your purchase price. A seller who has owned since 2012 may be paying half of what you will. Multiply your price by the municipality's total millage (most Broward cities land between 1.8% and 2.1% once non-ad valorem assessments for fire and solid waste are included) and use that figure, not the seller's bill.

2. Insurance is a quote, not an assumption

South Florida insurance is driven by roof age and material, year built, construction (CBS versus frame), wind-mitigation features (hip roof, straps, impact openings), flood zone and claims history. The same six units can quote at $9,000 or $22,000 a year. Get a real indication during your inspection period — your lender will require coverage anyway, and the roof's remaining life is the most common reason a small-building deal falls apart.

3. Reserves, management and your own time

Lenders add $250–$350 per unit per year for capital reserves whether the seller shows it or not. Add management at 6–10% of collected rent even if you plan to self-manage — because one day you won't, and the next buyer's lender will. Repairs and maintenance run 8–12% of income on older stock. Owner-paid utilities (water, sewer, trash, common-area electric) are easy to verify from twelve months of bills; ask for them.

Everything else — landscaping, pest control, legal, licenses, bookkeeping, turnover costs — belongs in an "other" line that is rarely below $300 per unit per year.

NOI, cap rate and what the building is actually worth

Effective gross income minus operating expenses equals net operating income. NOI divided by price is the cap rate. Compare it with what similar buildings in that submarket trade for on real numbers, not advertised ones. The deal calculator does this in seconds.

Then value the building two more ways: price per unit against recent sales of similar vintage and condition (the Fort Lauderdale metro averaged about $267,000 per unit in Q3 2026 across all classes; small older buildings are typically well under that) and replacement cost — if you're paying more per unit than new construction costs nearby, you need a very good reason.

Financing: the 5-unit line changes everything

	1–4 units	5–12 units
Loan type	Residential (conventional, FHA, VA, portfolio)	Commercial (bank, credit union, agency small-balance, DSCR lenders)
Underwritten on	Your income and credit (rents help)	The property's NOI — DSCR of ~1.20–1.30x required
Down payment	3.5–25% (owner-occupant lowest)	25–35%
Rate & term	30-year fixed available	5–10 year terms, 25–30 year amortization, often adjustable after
Recourse	Personal	Usually personal with local banks; non-recourse on larger agency loans
Appraisal	Residential form; comps	Commercial narrative; income approach

The practical result: a fourplex with owner-occupant financing can work at prices and rates that would sink a six-unit. If you're starting out, the "house hack" — live in one unit of a 2–4 unit building with a low down payment — remains the best entry point in South Florida.

Cash flow, DSCR and cash-on-cash

Annual debt service is simply your monthly payment times twelve. NOI minus debt service is cash flow; NOI divided by debt service is DSCR. Cash flow divided by all the cash you invested (down payment, closing costs, renovation) is cash-on-cash return. On a value-add building, model year one honestly (thin) and year three realistically (after renovations and re-leasing). Avoid projecting rent growth above 2–3% a year; metro rents grew 0.8% in the twelve months to Q3 2026.

The due-diligence list

1. Lease audit. Every lease matches the rent roll; deposits accounted for; no undisclosed concessions or side agreements.
2. Estoppel letters signed by tenants confirming rent, deposit and lease terms.
3. Roof: age, permit, material, remaining life, and a quote if it's within five years of replacement.
4. Electrical: service size, panel brands, aluminum branch wiring, separate meters per unit.
5. Plumbing: supply and drain material, sewer-scope of the main lines, water heaters, meter situation.
6. Structure and envelope: CBS versus frame, windows (impact or not), stucco cracks, soffits, drainage.
7. Permits and code: open permits, unpermitted additions, and for older buildings the status of Broward County's building safety recertification ("40-year inspection") where it applies.
8. Flood zone and elevation certificate; insurance quotes for wind, liability and flood.
9. Utilities: twelve months of bills; who pays what; submetering or RUBS potential.
10. Taxes: property appraiser record, any pending assessments, your projected bill.
11. Environmental: age-appropriate checks (asbestos in older finishes, lead paint disclosure pre-1978, underground tanks).
12. Exit: who buys this from you in five years, and at what cap rate?