Beginners Guide to Miami Commercial Real Estate

By: Vanessa Arellano Doctor

If the terms "commercial real estate" is alien to you, then this article will serve as a good jump-off point, should you consider dabbling into the colorful world of Miami commercial real estate. Truth be told, commercial real estate is both a simple and complicated concept.

Simple, in the sense that you can easily understand all the basic ideas and process, and complicated, in a way that will probably cause a lot of confusion once the discussion goes deeper. Since you're a beginner to commercial real estate, then let's stick with the easy part, first.

Understanding Commercial Real Estate

Commercial real estate in Miami is basically the same as in any other U.S. territory, although business in Miami might be more active than, say, Iowa, for instance, because Miami is one of the most popular tourist and party hubs of the country. But before we get into that, let us identify what commercial real estate means.

Commercial real estate pertains to any kind of property that is either bought or sold based on the commercial value it brings. For example, a building is considered commercial property. An apartment unit is so, too. So is a school, a hospital, a retail outlet, a resort, a hotel, a parking lot, and even a single-family home, as long as its being used for rentals. Any kind of property that makes money off itself is categorized as commercial real estate. The home you occupy is not included in this list.

Property prices in Miami may be a bit higher than the its quieter counterparts, because Miami is constantly bustling with activity. Celebrities and tycoons buy houses here, business want to set up shop here, and tourists are always looking for new things to explore here. If you're looking into cashing in on the Miami commercial real estate market, then you're definitely going to get some windfall after a short while. That is, of course, if you know to work it.

Pricing Miami Commercial Real Estate Properties

How do you determine the value of a Miami commercial real estate property? Three ways: based on the cost of building a similar property, the prevailing market value of such property type, and the property's net operating income. Net operating income means total income generated when the property is fully utilized minus maintenance and operating costs, taxes, uncollected rents, and other losses.

Once you have these prices with you, since you're dealing with a Miami real estate property, it would be all right to tack on an additional 5% to 10% to the rate. When selling real estate, it's always best to give your potential buyer the highest, yet fairest, possible price you can give for the property and then negotiate from there. If you start with your lowest possible price, then it's likely that the other party will want to go much much lower. You end up with nothing, and even with a deficit, if this happens.

As a beginner to the Miami commercial real estate market, it is prudent to read up on the current market trends and how-tos of real estate investment first before making your initial move. You can simply argue that gut feel would work, but when you're dealing with this much money (as you're in Miami, where properties could reach millions of dollars) it's best to be on the safe side. After all, you wouldn't want your first try to blow up in your face, right?

Vanessa Arellano Doctor




America Properties
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