The term Real Estate is defined as real property made up of land and the buildings constructed on it, including the natural resources of the earth, as well as flora and fauna, farmed crops, livestock, water and mineral deposits on the land. It also includes the fixtures, roads, and utility systems on the earth.[i] It means real or physical property.
Types of Real Estates: There are four main categories of real estate, each having a unique purpose and utility.[ii]
- Land: Land is the base for all types of real estate and refers to undeveloped property and vacant land, working farms, and ranches. Vacant land typically includes undeveloped, early development or reuse, subdivision and site assembly as subcategories. To increase the density and value of the property, developers acquire land and combine it with other features and rezone it.
- Residential: The most common type of real estate is Residential real estate. It consists of housing for individuals, families, and groups of people. It consists of both new constructions and resale homes, condominiums, townhouses, duplexes, high-value homes, and other types of living arrangements.
- Commercial: Lands and buildings that are utilized by a business to carry out operations are known as Commercial real estate. This includes shopping centers or malls, medical and educational buildings, offices, parking lots, individual stores, apartment buildings, and hotels.
- Industrial: Land and buildings used by businesses for business activities such as mechanical production, factories, construction, research and development, transportation, logistics, and warehousing come under Industrial real estate.
Examples of Real Estate: Let’s look at some specific examples of different types of real estate:[iii]
- Single-family dwellings: Homes designed for a single-family.
- Multi-family dwellings: Groups of homes designed for more than a single-family.
- Apartment: Consists of an individual unit in a multi-unit building, often found in multi-story apartment buildings. The boundaries of an apartment are outlined by a perimeter of locked doors.
- Multi-family house: It consists of multi-story attached buildings where every floor is an individual unit or apartment.
- Condominium or Condo: A building comprising of individual units which are owned by different people.
- Detached house: A free-standing, stereotypical home, not attached to any other building.
- Portable house: A house that is mobile and can be moved around on a flatbed truck.
Overview of Real Estate Industry: Real estate industry can be divided into six different areas:
- Development: The process involving the purchase of vacant land, rezoning, constructing and renovating of buildings and sale or lease of finished units to end customers. Developers earn profit by adding value to the property and taking financial risks.
- Sales and Marketing: Sales and Marketing firms work in collaboration with Developers for the purchase of their finished units. They earn a commission for creating marketing material and deploying sales agents to sell the units.
- Brokerage: A firm that employs real estate agents or realtors to facilitate a transaction between a buyer and seller and get the best possible terms and payment for its party is called real estate brokerage.
- Property Management: Property management firms help property owners rent out their properties, typically charging a percentage of the rent for the same.
- Real Estate Lending: Lenders include banks, private lenders, government institutions, and credit unions. All these play a significant role in the real estate industry.
- Professional Services: Accountants, lawyers, interior designers, contractors, construction workers, etc. all work in the real estate industry and make it function.