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John Steuart

Real Estate

What Are 6 Categories of Real Estate?

Real estate is more than just a plot of land or a house. It has different definitions and legal terms that you will need to know. It is important to know these terms if you invest in real estate. The term real estate comes from the word "realty," which was simply a word that meant land in the olden days.

There are 6 main types of real estate. Residential real estate, for example, includes homes and apartments. It encompasses single-family homes and multifamily buildings in urban, suburban, and rural areas. Although residential real estate is primarily used for homes, it includes commercial property.

Industrial real estate is another way to invest in real estate. These investors are usually business owners looking to establish a name and create a working space for their employees. While sales can be important, most returns in this type of real estate come from rental profit. Industrial real estate refers to all buildings and lands used for manufacturing, assembly, or warehousing. They can also be used for offices, research, and distribution.

Industrial real estate can be divided into two main types: retail and industrial. Industrial properties are generally large warehouses that contain industrial space, while flex industrial properties are often a mix of production and office space. Retail real estate, on the other hand, includes stores and restaurants. While retail foot traffic has declined a bit due to eCommerce, commercial real estate plays an important role in the retail business model.

Understanding the differences between real estate types can be beneficial for investors. Knowing which markets to invest in will help you make the right business decisions. It would help if you explored the differences between primary, secondary, and tertiary markets to make the best investment decisions. Once you have a general idea of the differences, you can look into the pros and cons of each type. For example, when deciding to invest in rental properties, the type of market you invest in is essential to ensuring your success.

While residential real estate is the most popular choice for investors, commercial properties are a good alternative for those looking for a higher yield. Commercial properties often offer better income and longer leases than residential properties. But it would help if you remembered that commercial properties usually require a bigger down payment and higher property management costs.

Raw land property is the most inexpensive option for an investor because it is often cheaper to purchase than developed land. Additionally, raw land properties typically increase in value over time. Some investors invest in raw land by leasing it to farmers. Alternatively, they may look for properties that have development potential. Either way, these are great investments for the beginner real estate investor.

While real estate has historically performed well, it remains an asset class with lower volatility than other investment types. It has a strong relationship with the Gross Domestic Product (GDP). As the economy grows, the demand for real estate increases. In addition, this stable demand allows real estate to generate higher returns than many other investments. It is also an excellent hedge against inflation. You can also make passive income from rental properties.

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