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Enter income, expenses, and property value to calculate the capitalization rate. Best for evaluating and comparing properties.
Income
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Annual Operating Expenses
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Often 6–10% of gross rents for residential
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Return on acquisition cost. Use when evaluating a deal before buying.
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Today's estimated value — use for refi or comparison
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Cap rate estimates a property's unlevered income yield by comparing annual Net Operating Income with property value. It is commonly used to compare income-producing properties before financing, taxes, appreciation, and investor-specific assumptions are added.
This calculator supports cap rate, implied property value, and required NOI workflows. Results are intended for screening and underwriting support, not as a standalone investment decision or formal valuation.
Why Cap Rates in Florida Look Different Than Anywhere Else
Florida investors face a cost stack that most out-of-state buyers underestimate. Property tax sits at roughly 1.1% of assessed value — moderate by national standards — but insurance is the real story. Average landlord policies now run $4,500 or more per year, and coastal properties with flood-zone designations can double that figure. Add a typical 7% vacancy factor, doc stamps on every deed transfer (0.7% statewide, 0.6% in Miami-Dade), and you start to see why Florida cap rates compress faster than the rent growth headlines suggest. The upside: Florida has no state income tax, so every dollar of net operating income stays in your pocket at the state level.
Florida-Specific Factors That Move Your Cap Rate
Insurance crisis. Citizens Property Insurance, the state insurer of last resort, has tightened underwriting since 2022. Private carriers have either left Florida or raised premiums 30-60%. A $4,500 annual policy on a $300K inland rental is common; coastal properties regularly hit $7,000-$9,000. This single line item can swing your cap rate by a full percentage point.
Flood zones. FEMA flood-zone designations (Zone AE, VE) require separate flood insurance through NFIP or private carriers. Budget $1,200-$3,600 per year on top of your windstorm policy. Always pull the FEMA flood map before running your cap rate numbers.
Homestead trap. Florida's Save Our Homes cap limits assessed-value increases to 3% per year for homesteaded properties. When you buy an investment property, there is no homestead — the county reassesses to full market value immediately. Sellers who homesteaded for years may quote property taxes far below what you will actually pay.
Coastal vs. inland. A beachfront condo in Fort Lauderdale and an inland duplex in Ocala exist in different cap-rate universes. Coastal properties carry higher insurance, higher purchase prices, and stronger appreciation expectations, pushing cap rates into the 3-4% range. Inland markets like Jacksonville or Gainesville still produce cap rates above 5% for well-bought properties.
Florida Cap Rate Benchmarks by Metro (2024-2025)
| Metro | Typical Cap Rate | Notes |
|---|---|---|
| Miami-Dade | 3.5 – 4.5% | Appreciation play; insurance very high near coast |
| Tampa Bay | 4.5 – 6.0% | Flood zones along Hillsborough Bay compress returns |
| Orlando | 5.0 – 6.5% | Strong rental demand from tourism-sector workforce |
| Jacksonville | 5.5 – 7.0% | Best cash-flow market in FL; lower entry prices |
Worked Example 1 — Orlando Duplex at $380,000
Purchase price: $380,000. Two units rented at $1,900 each. Gross scheduled income: $3,800 × 12 = $45,600/yr. Vacancy at 7%: $45,600 × 0.07 = $3,192. Effective gross income: $45,600 − $3,192 = $42,408.
Annual expenses: property tax (1.1%) = $4,180 | insurance = $4,500 | maintenance (5% of EGI) = $2,120 | property management (8% of EGI) = $3,393 | flood insurance = $1,200. Total operating expenses: $15,393.
NOI = $42,408 − $15,393 = $27,015. Cap rate = $27,015 ÷ $380,000 = 7.11%. That puts this duplex at the high end of the Orlando range — a solid buy if the units are in good condition and the neighborhood supports $1,900 rents.
Worked Example 2 — Jacksonville Single-Family at $230,000
Purchase price: $230,000. Rent: $1,550/mo. Gross scheduled income: $1,550 × 12 = $18,600/yr. Vacancy at 7%: $1,302. Effective gross income: $18,600 − $1,302 = $17,298.
Annual expenses: property tax (1.1%) = $2,530 | insurance = $2,800 | maintenance (5% of EGI) = $865 | management (8% of EGI) = $1,384. Total operating expenses: $7,579.
NOI = $17,298 − $7,579 = $9,719. Cap rate = $9,719 ÷ $230,000 = 4.23%. Lower than the duplex because single-family rentals carry the full expense load on one income stream. Jacksonville's lower insurance costs (inland, no flood zone) help keep this above 4%.
Florida Cap Rate FAQ
What is a good cap rate for a rental property in Florida?
Anything above 5% is considered solid for a Florida buy-and-hold rental in 2025. Coastal markets like Miami rarely exceed 4.5%, while inland cities like Jacksonville and Ocala can hit 6-7% on well-bought properties.
How much does Florida insurance actually affect my cap rate?
On a $300,000 property, the difference between a $2,500 policy (inland, no flood) and a $7,000 policy (coastal, flood zone) is $4,500 per year — that alone swings your cap rate by about 1.5 percentage points.
Should I include flood insurance in my cap rate calculation?
Yes. If the property is in a FEMA flood zone, flood insurance is a real, recurring operating expense. Leaving it out gives you an artificially high cap rate that will not match your actual returns.
Do Florida doc stamps affect cap rate?
Doc stamps are a one-time transfer tax (0.7% in most counties), not a recurring expense. They do not appear in NOI or cap rate. However, they increase your total acquisition cost, which matters for cash-on-cash return.
Why do sellers quote much lower property taxes than what I will pay?
Florida's Save Our Homes amendment caps assessed-value growth at 3% per year for homesteaded properties. When you buy, the homestead drops off and the county reassesses to current market value. Always calculate tax on the full purchase price, not the seller's tax bill.
Is Orlando or Jacksonville better for cap rates right now?
Jacksonville typically delivers higher cap rates (5.5-7%) because entry prices are lower. Orlando offers stronger appreciation and tourism-driven rental demand but cap rates usually top out around 6.5%. Your choice depends on whether you prioritize cash flow or equity growth.
How does no state income tax help Florida investors?
Florida does not tax rental income at the state level. An investor in California paying 9-13% state tax on the same NOI keeps significantly less. This does not change your cap rate (which is a pre-tax metric), but it means your after-tax yield in Florida is higher than the same cap rate in a high-tax state.
Sources
- Florida Office of Insurance Regulation — Citizens Property Insurance rate filings (2024)
- Tax Foundation — State and Local Property Tax Collections per Capita (2023)
- FRED — Federal Reserve Economic Data, rental vacancy rates for Florida MSAs
- Zillow Observed Rent Index — Orlando, Jacksonville, Tampa, Miami (Q1 2025)
- FEMA Flood Map Service Center — National Flood Hazard Layer