Types of real estates you should know

Real estate investment can take many different forms. If you’re just getting started in real estate, it’s a good idea to learn about the many types of real estate investments so you can figure out which one is right for you.

What Is the Definition of Real Estate?

Real estate is defined as the transactional sale or acquisition of real property, which includes not just the land but also everything permanently related to it.

This includes natural resources as well as land modifications such as buildings. Furthermore, as long as the property is founded on a piece of land, modifications to the property can include new or existing structures.

Real estate can be utilized for a variety of purposes, including providing housing for people, farming raw land, and renting commercial property for a business.

Professionals in the real estate sector, such as real estate agents, brokers, and developers, make money by constructing or facilitating the exchange of property.

Residential, commercial, industrial, and raw land are the four basic types of real estate.

Residential real estate

Because it has a lower cost of entry and might be easier to finance than commercial real estate, residential real estate is a popular first investment for aspiring real estate investors.

Residential properties are one of the most common types of real estate in Nigeria to invest in, with a variety of housing styles to consider. Any property used for residential purposes falls under this category.

Residential real estate includes single-family homes, condos, and vacation homes, among other places where people live or stay.

Residential real estate investors make money by collecting rent (or regular payments for short-term rentals) from tenants, or by profiting from the increase in value of their property between the time they buy it and the time they sell it.

Residential real estate investing can take various forms. It could be as easy as renting out a spare room or as complex as purchasing and reselling a home.

While you can acquire a residential home strictly for investment purposes, you can also rent out extra room in your primary residence to make money.

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types of real estate

Commercial Real estate

Apartment complexes, gas stations, grocery shops, hospitals, hotels, offices, parking facilities, restaurants, shopping centers, stores, and theaters are examples of commercial properties.

The second most frequent type of real estate to invest in is commercial real estate (CRE). Any property that is primarily used for business reasons is classified as commercial real estate.

The increased up-front expense for new real estate investors may make it a less popular investing approach.

However, there are options for investing with a smaller initial commitment, such as crowdfunding or real estate investment trusts (REITs).

Commercial real estate (CRE) is property that is used solely for commercial purposes or to offer a workspace, as opposed to residential real estate, which is utilized for living purposes.

Commercial real estate is frequently leased to tenants for the purpose of conducting income-generating operations. This vast category of real estate can range from a single storefront to a large shopping mall.

Owning and managing leased commercial real estate necessitates the owner’s full and continuing management.

A commercial real estate management firm can assist property owners in finding, managing, and retaining tenants, overseeing leases and financing alternatives, and coordinating property upkeep and marketability.

Industrial real estate

Property used to create, manufacture, or produce goods and products, as well as logistics real estate that facilitates the movement and storage of products and goods, is referred to as industrial real estate.

These structures lack the glitz and glam of other types of real estates, such as gleaming skyscrapers, well-kept multifamily neighborhoods, or bustling commercial malls. Industrial real estate, on the other hand, is critical since these properties represent the backbone of the industrial economy.

All land and structures that accommodate industrial activities such as production, manufacturing, assembly, warehousing, research, storage, and distribution are referred to as an industrial real estate.

Most people associate real estate with the places where they spend their time: their homes, offices, favorite retail store, or favorite restaurants/bar.

However, when they hear “industrial real estate,” they may conjure up images of massive brick chimneys spewing foul-smelling smoke or a factory assembly line with computer-assisted machinery putting cars together.

This image may relate to some aspects of industrial activity, but industrial firms as a whole go much beyond this picture, working behind the scenes of all these high-traffic areas and essentially providing the fuel that allows them to function.

Each city has defined areas for industrial properties, which are depicted on a zoning map and describe where these spaces can be built and operated so that the activity on these sites does not interrupt companies or residences that might be located nearby.

Related: Types of home builders

Raw vacant land

Land that has been subdivided or where the development process to build residential properties — such as a planned urban development (PUD), townhomes, or commercial real estate — has already begun is often worth more than raw vacant land.

The cost of purchasing land varies greatly based on the size, location, and zoning (or permitted use) of the property.

Farmlands as well as land with no established commercial or residential development, are examples of vacant land. Natural resources such as mineral, water, and air rights may also be included in this category of investment, which is sometimes referred to as raw land.

Raw land can be bought as a long-term investment in the hopes of capital growth, or for development by another party.

Investors can also buy land and develop it on their own. Another popular investment method is wholesaling or selling idle land, which often generates profit by adding value.

Bottom Line

These primary property categories account for the majority of real estate ownership transactions, and the vast majority of real estate agents and investors work with them.

However, as a new real agent, you should concentrate your emphasis and focus on one or more types of properties.

A study of the number of properties of each type in your area, as well as their relative valuations, might reveal the potential financial benefits of investing in each.

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