Estimating expenses for rental properties, mostly Miami area

[Delfina Lopez Freijido]

Hi BP fellows! I’m a somewhat new rental investor in the US (I’m a homeowner in my home country and an airbnb host there, but the experience feels very different). I have already started doing the math for evaluating properties and been having a hard time getting realistic monthly expense estimates for a studio/1bed1bath condo (400-650 sqft approx). I’ll be starting with short term rentals and now looking into the Miami area, with a focus on Miami Beach (to start off, opened to other hoods). 

So far here’s what my assumptions have been:

• annual taxes (published in MLS, around)
• insurance (around $1740 annual, which may be a bit too high)
• HOA/condo fees. (Published in MLS, between 300-500)
• Electricity: $53
• Gas: $53
• Water & Sewage: $53
• Garbage: $20
• monthly principal and interest payment: I am starting off with “all cash” payment assumption, while I get down to the mortgage offer analysis for non-resident foreigners (any tips here, welcomed!)
• Repairs & maintenance: 10% (averaging calculators reference)
• Vacancy: 10% (calculator reference)
• Capex: 10% (calculator reference)
• Management fees: 12% (calculator reference)

So far with this assumptions:

• When taking Trulia’s rental references (longer term rentals): I barely cover the 1% rule
• When taking AirBnB rental references (short term rentals): I cover the 1% rule but hardly the 2% rule
• And looking at the reports, I believe this is to a good point do to the expenses assumptions… never hit the 50% rule. 

All help in getting around these estimations would be hugely appreciated! Also, if anyone is looking into the Miami region and has other suggestions to share, I’d be happy to learn. 

Thanks, 

Delfi