TYPES OF REAL ESTATE
- TABLE OF CONTENTS
- WHAT IS REAL ESTATE
- TYPES OF REAL ESTATE
- EXAMPLES OF REAL ESTATE
- REAL ESTATE INVESTING
- REAL ESTATE INDUSTRY:HOW IT WORKS
WHAT IS REAL ESTATE
The property, land, buildings and air rights above the land and underground rights below the land. The term means real, or physical, property.
“Real” comes from the Latin root res, or things. Others say it’s from the Latin word rex, meaning royal. Since, kings used to own all land in their kingdoms.
Real estate is real property that consists of land and improvements, which include buildings, fixtures, roads, structures, and utility systems. Property rights give a title of ownership to the land, improvements, and natural resources such as minerals, plants, animals, water, etc.
TYPES OF REAL ESTATE
There are several types , each with a unique purpose and utility. The main categories are:
1.Residential real estate
Residential includes both new construction and resale homes. The most common group is single-family homes. There are also condominiums, co-ops, townhouses, duplexes, triple-deckers, quadplexes, high-value homes, multi-generational and vacation homes.
2.Commercial real estate
Commercial real estate includes shopping centers and strip malls, medical and educational buildings, hotels and offices. Apartment buildings are often considered commercial, even though people use them for residences. That’s because they are owned to produce income.
3.Industrial real estate
Industrial includes manufacturing buildings and property, as well as warehouses. The buildings are used for research, production, storage, and distribution of goods. Some buildings that distribute goods are considered commercial. The classification is important because the zoning, construction, and sales are handled differently.
This includes vacant land, working farms, and ranches. The subcategories within vacant land include undeveloped, early development or reuse, subdivision and site assembly.
Now that we’ve outlined the four main categories, let’s explore some specific examples of different types of real property.
Single-family dwelling – Any home designed for only one family
Multi-family dwelling – Any group of homes designed for more than one family
Attached – Any unit that’s connected to another (not freestanding)
Apartment – An individual unit in a multi-unit building. The boundaries of the apartment are generally defined by a perimeter of locked or lockable doors. Often seen in multi-story apartment buildings.
Multi-family house – Often seen in multi-story detached buildings, where each floor is a separate apartment or unit.
Condominium (Condo) – A building with each unit owned by each person.
Detached house – A free-standing building not connecting to anything else (a stereotypical “home”)
Portable house – Houses that are moveable on a flatbed truck
Mobile home – A vehicle on wheels that has a permanent residence attached to it
Villa – A building with only one room and typically a steep pointy roof
Hut – A dwelling typically made of raw materials such as bamboo, mud, and clay
INVESTMENT IN PROPERTY
Everyone who buys or sells a home engages in real estate investing. That means you must consider several factors. Will the house rise in value while you live in it? If you get a mortgage, how will future interest rates and taxes affect you?
Many people do so well with investing in their homes. They want to buy and sell homes as a business. There are many ways to do that. First, you can flip a house. That’s where you buy a house to improve then sell it. Many people own several homes and rent them out. You can do so with the help of agencies. For instance, Landster, Zameen.com, Graana.
Before you do that, make sure you know where we are in the current business cycle. You don’t want to start potentially risky investing if the real estate market is going to crash.
Investors can also invest in housing without buying a home. They can buy stocks of home builders. Their stock prices rise and fall with the housing market. Another way is with Real Estate Investment Trusts, called REITs. These are investments in commercial . Their stock prices lag behind trends in residential by a few years.
REAL ESTATE INDUSTRY: HOW IT WORKS
Development is a process that involves the purchase of raw land, rezoning, construction and renovation of buildings. In addition, sale or lease of the finished product to end users. Developers earn a profit by adding value to the land (creating buildings or improvements, rezoning, etc.) and taking the risk of financing a project.
- SALES AND MARKETING
Sales and marketing firms work with developers to sell the buildings and units they create. These firms earn a commission for creating all marketing material. Moreover, use their sales agents to sell the inventory of completed units. These firms typically focus on new units.
A brokerage is a firm that employs a team of real state agents (realtors) who help ease a transaction between the buyers and sellers of property. Their job is to represent either party and help them make a buy or sale with the best possible terms.
- PROPERTY MANAGEMENT
Property management firms help owners rent out the units in their buildings. Their jobs include collecting rent, showing units, fixing deficiencies, performing repairs, and managing tenants. They charge a fee, typically a percentage of the rent, to property owners.
- REAL ESTATE LENDING
Lenders play a major role in the industry as almost all properties and developments use leverage (debt) to finance their business. Lenders can include banks, credit unions, private lenders, and government institutions.
- PROFESSIONAL SERVICES
There are a variety of professionals who work in the industry and help make it function. The most common examples (other than the ones listed above) are accountants, lawyers, interior designers, general contractors, construction workers, and tradespeople.
Buying a property anywhere in the world is a stressful process. However, if you do your homework and learn about the ins and outs of the transaction by using the resources available to you online, it can be a much better experience for you.
Always remember to check a property’s location, nearby amenities, proximity to work, attractions, market statistics, and the community’s safety.
For this reason, you can read our blog CHARACTERISTICS OF A GOOD HOUSING SOCIETY.
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