What Types Of Real Estate Are There?

Real estate is the transactional sale or acquisition of real property, which includes not just the land itself but also anything permanently attached to it. This covers both natural resources and land modifications such as houses. In addition, modifications to the property may include both new and old structures, so long as the property is situated on the land.

There are a variety of uses for different types of real estate, ranging from providing individuals with a place to live to renting a commercial building for a business. Professionals in the real estate industry, such as real estate agents, brokers, and developers, generate income funds by constructing or facilitating the exchange of property.

4 Main Types Of Real Estate Properties

Investing in real estate can sometimes feel intimidating due to the sheer number of available options.

Understanding real estate and how they work is beneficial for those just starting in the industry. Then you can assess which real estate asset type is optimal for your investment strategy:

1. Residential

The residential real estate market in the United States is enormous. According to the World Property Journal, the value of the housing market reached $33.6 trillion this year, which is greater than the combined annual GDPs of the United States and China.

It is easy to comprehend why the value of the U.S. housing market has increased by more than 50% over the past decade if you consider the various investment opportunities in residential real estate:

  • Single-family houses
  • Townhomes
  • Mobile homes
  • Duplex
  • Triplex
  • Fourplex
  • Condominiums
  • Cooperatives (Co-op)

2. Commercial

The commercial real estate (CRE) market is best recognized for world-class retail complexes in California, gorgeous office properties in New York City, and enormous investor personalities.

So, it may come as a surprise to find that current estimates place the size of the U.S. commercial real estate market at between $14 trillion and $17 trillion — roughly half the size of the residential market.

While everyone requires a place to live, not everyone requires a place to shop — at least not at the same time. Commercial real estate is property utilized for business purposes, such as:

  • Office space – Medical facilities, suburban office parks, and urban office buildings
  • Retail space – Fast food restaurants, local strip malls, and regional power centers
  • Five or more unit apartment buildings and smaller multifamily properties
  • Self-storage and mini-storage facilities 
  • Mobile home parks
  • Leisure and hospitality property
  • Grocery stores and gas stations
  • Parking lots and garages
  • Movie theaters

3. Industrial

Despite the fact that industrial real estate is utilized for business purposes like commercial real estate, it is typically categorized as a distinct type of property due to the specific nature of its usage:

  • Manufacturing facilities
  • Production facilities and food processing centers
  • Storage warehouses and distribution centers 
  • Freezer and refrigerated storage facilities 
  • Power plants and solar generating stations
  • Research and development parks 
  • Data server centers for companies (Google and Facebook)

4. Land

In urban areas, vacant or undeveloped land is purchased for future development and natural resources rights such as water, minerals, or air rights. Land investment is a common long-term strategy because taxes and maintenance expenses are often far lower than those of developed properties with structures and tenants.

Land property types in real estate include:

  • Farms and ranches
  • Undeveloped raw land
  • Lots in a subdivision
  • Recreational parcels for hunting, camping, and fishing
  • Orchards
  • Timberland
  • Planned urban development (PUD) for residential or commercial development

How Does The Real Estate Industry Really Work?

Despite the size and complexity of the real estate market, many individuals believe that the industry is comprised solely of brokers and salespeople. In reality, however, millions of individuals earn a living through all types of real estate, not just in sales but also in appraisals, financing, construction, property management, development, education, counseling, education, and other professions.

Also dependent on the real estate industry are banks, accountants, architects, title insurance companies, land surveyors, and attorneys, among others.

Real estate is a major contributor to economic growth in the United States. In fact, the U.S. Census Bureau’s monthly report on housing starts — the amount of new residential construction projects — is an important economic indicator. The report contains data on building permits, housing starts, and housing completions, broken down into three distinct categories:

  • Single-family homes
  • Homes with 2-4 units
  • Multifamily buildings with five or more units — like apartment complexes

Start your investment quest today with the assistance of Saint Investments’ dependable professionals. Schedule a free consultation today!