While a lot of new investors know that real estate is one of the oldest and most famous assets there is, some of them don’t realize how many different types of real estate is out there. Each type of real estate has its own potential benefits and pitfalls. Generally, real estate refers to the buying, producing and selling of a real estate property. Recently, the real estate industry has been a critical driver of economic growth.
Handing the sale or transfer of a property is often done with the help of a real estate attorney to make sure that all aspects of the transfer of land are properly handled. Simply put, real estate is the physical property while an estate is a particular person’s rights and ownership of that property and what can possibly be done with it. While all estates involve the ownership of property, there are different types of real estates, which means something else regarding the length of ownership and the right to transfer or sell such property.
Here, I’d like to walk you through some of the different areas in real estate so you can get a general overview of each property and if in any case you decide to devote your significant time, effort and resources in real estate.
Below is a list of different types of real estate with a description of how each category is typically defined.
Types of Real Estate
Residential Properties
The residential type of property is usually by far the most popular with both new and experienced agents. This includes mostly new construction and resale homes. The most common category for this type of real estate is a single-family home. There are also condominiums, townhouses, triple-deckers, quadplexes, vacation homes and other high-value homes where a person pays you to live in that particular property. There’s plenty to go around. Here, the length of stay is based upon the rental agreement, or the agreement they have signed with you, which is known as the lease agreement.
In a large scale, the most widely practiced property type is residential. Whether it’s a single home, condominiums or townhouses, most of the agents start with this particular type. The only trick is to do what you like and what holds your interest.
Commercial Properties
Commercial properties can be an empty land for commercial use, or an existing business building. This consist mostly of shopping centers and malls, offices and hotels including medical and educational buildings as well as skyscrapers. These apartment buildings are often considered as commercial properties, even though they are mostly used for residences. If you are thinking of spending your savings and decide to construct a small building with individual rooms, you could rent them out to companies and small business owners, who would likely rent to use the property.
Unless someone has an extensive experience in this particular industry, it’s better to enter this type of specialization with enough expertise in the business of land or residential property markets.
Industrial Properties
This consist of everything from industrial to manufacturing buildings and properties, as well as warehouses to storage units and other special purpose real estate that generates sales from customers who temporarily use this facility. All the buildings can be used for research, production, storage and distribution of goods. This property is sometimes considered as commercial real estate, even though the zoning, construction, and sales are both handled differently. With the legal, environmental and other issues involved, this property requires lots of expertise.
There are many proper disclosures and inspections needed in the industrial properties with the increasing number of environmental concerns.
Vacant Land
In rapidly growing areas, specializing in a building lot for properties can be useful for any agent. As long as it goes out and spreads continuously, the area you have to cover for will get farther out on the city and possibly get the interest of a potential buyer.
Vacant lands in some areas actually command higher commission percentage but are becoming less frequently now. This includes vacant land, working farms and other land properties. Now that land is expensive, there are specific areas where the commissions are a lot higher. With a higher priced land, there are only a few validations that make it significantly simpler for the agents to handle. There are no structural inspections, insurance issues, floor plans, etc.
Conclusion
As you can see, there are many types of real estate properties in the business. Agents and brokers who are interested in this particular type of business can usually find a portion that suits their personality and financial goals. Property can usually take much longer to become established in the market, but the income can be worth it.