Florida is a well known place because of those tourist attractions that continue to attract a lot of tourist. Because of the constant increase of numbers of visitors and immigrants, the Florida commercial real estate has become more active and more in demand. This is why there are lots of real estate investors and entrepreneurs who want to invest with the Florida as their site for their businesses.

There are several ways in order to earn from this commercial property. You can buy one for the hopes of the increase in value will do well because of great demand and great potential and buying Florida commercial property for you to used as site for your business. With the tourists that keep on coming back in Florida for sure any of these ways will surely help you generate bigger income.

So with this for sure you are convinced that you will earn a lot in investing with this commercial property. So if you are planning to buy one here are some helpful tips for you to have a successful buying process.

The number one factor that you need to consider is the location of the commercial property that you plan to acquire. Studies show that a good location can boost sales by more than half. So if your purpose in acquiring a commercial property is for your business you have to choose the commercial property that is accessible, visible and convenient for your client.

Since demand is greater for them a property having good locations will surely have increase value. And because of this it is hard quite hard to find a Florida commercial real estate property that has good location that are close to major destinations but having the right resources, a competent agent get you on your way to have one.

There are factors that affect the market value of the commercial property. The most visible factor is the locations and by this, the closer to major destinations that expensive the value is. Beachfront properties are some of the most expensive commercial real estate in Florida.

Economic issues is also one of the biggest factors that can affect on the value of the commercial property such as the slump that happened to the whole country had bring lower value for most real estate properties. This has pushed the commercial real estate much lower that it was before; some are being closed at almost half of the listing value of property.

And of course the most important thing that you need to consider in choosing the right Florida commercial real estate is the one that will cater to the needs of your business. With all of this you are sure enough that you will attain a bigger profit. So you have to be careful in choosing one.

By: Allison Manalang Ayson

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All property that has the potential to generate revenue now or in the future is commercial real estate. Some types of commercial real estate are:

o OFFICE PROPERTIES… Executive office space, office buildings, executive suites, flex space, rental office space, upscale office parks, corporate headquarters, class A office suites, freestanding offices, bank branches.

o RETAIL PROPERTIES… Shopping centers and shopping malls, shops, strip center sites, chain store site, showrooms, major franchise locations, showroom space, retail sites, pads, out parcels, free standing stores.

o DISTRIBUTION AND INDUSTRIAL PROPERTIES… Warehouses for lease, sublease, rent and for sale, industrial facilities, industrial parks, factories, factory sites, mills, industry manufacturing plants, cross dock trucking terminals, shipping container yards, supply chain management infrastructure, 3pl resource provider company facilities, bonded warehouses, rail freight warehousing, refrigerated climate controlled warehouse space, logistics bulk transport, air cargo airport rentals, deepwater port commerce, airports, rail yards, deep water ports, cold storage and dry storage facilities.

o HIGH TECH PROPERTIES… Research and development parks, medical laboratories, call centers, scientific building projects, office space, NAP, R&D Park.

o LAND BROKERAGE… Corporate Headquarters locations, land tracts, residential development tracts, Industrial Parks, zoned land parcels, speculative acres, waterfront property, reality sites, business parks, resort property, regional mall sites.

o INVESTMENT PROPERTY… Office buildings, industrial rental properties, realty, multifamily rentals, regional shopping malls, shopping centers, rental properties, net leased properties, business parks, land parcels, residential developments.

o HOTEL AND RESORT PROPERTIES… Hotels, motels, resort lodging and hospitality properties, luxury resorts, convention centers, motel and hotel brokers, golf courses, theme park sites, stadiums, attractions. Note that unused property held for future appreciation is also considered to be commercial real estate.

By: Ron Redlich

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The income approach is often given primary emphasis when appraising a commercial real estate used to generate income. Estimates of value via the income approach are highly sensitive to changes in revenue, expense and capitalization rates.

Correctly performing a cost approach analysis appears to be and is technically difficult. It appears easy to correctly prepare an income approach analysis for commercial real estate. However, correctly preparing the analysis requires three criteria: 1. an understanding on the type of value, 2. accurate data, 3. accurate application of the income approach.

Commercial income properties can be valued based on the leased fee estate. The fee simple estate is appropriate for properties with leases consistent with market rent and terms. Valuation of the leased fee estate is more appropriate for properties with above market or below market rents. Valuing properties with below market rental rates based strictly upon its actual rental rates would understate its value. Valuing it using market rental rates would overstate its market value.

Accurate data is the basis of a reliable income approach conclusion. This includes information on rental rates, occupancy rates, new construction, absorption, operating expenses and capitalization rates. Rental rates are usually obtained from rental comparables, subject property leases and aggregate market data. The same is true for occupancy rates. New construction can be obtained from personal observation while doing fieldwork, research and aggregate market data.

Operating expenses are evaluated on a line-item by line-item basis. The first step is usually to summarize the subject property’s operating expenses for a two to four year period. This is termed “spreading the data”. It tends to highlight anomalies in data. Comparable expenses and industry data (IREM and DOMA) can also be useful.

Capitalization rates are estimated based on data from recent comparable sales and discussions with market participants.

The direct capitalization method and the discounted cash flow analysis are frequently utilized to determine estimates of value for the income approach. Other techniques include gross rental multiplier (GRM) and effective gross income multiplier (EGIM).

The formula for the direct capitalization method is as follows:

Market Value = NOI / Cap Rate

NOI is net operating income. Cap rate is capitalization rate.

The formula for GRM is:

Market Value = Gross Possible Rent x GRM

GRM is gross rent multiplier. It is abstracted from market data and discussions with market participants.

The formula for EGRIM is: Market Value = effective gross income x EGIM

Effective gross income is abstracted from market data and discussions with market participants.

The discounted cash flow analysis evaluates net appreciating income and net sales proceeds and discounts these to a current indication of value.

The income approach is often given primary emphasis in appraising income properties. An appraiser “should look through the eyes” of market participants when selecting an income approach methodology. The appraiser should emulate the process of market participants rather than an alternate approach.

By: Patrick C Oconnor

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