Real state is generally a class of real property that includes land and anything on it, whether man-made or natural, as long as it is permanently attached to it. You can invest in real estate either directly by buying a rental property or home or indirectly through a Real Estate Investment Trust (REIT).
The term real estate is often confused with other related terms, such as real property and land. However, there are distinct differences as displayed by the following definitions:
• Real estate – Land plus any other permanent property on it, e.g., trees, lakes, etc.
• Real property – A classification of property that refers to the benefits, interests, and inheritance rights in real estate ownership.
• Land – The physical surface down to the earth’s core and upwards towards the airspace.
Types of Real Estate
Generally, real estate included all that is above and below a piece of land, whatever is permanently attached to it, and the land ownership rights to sell, lease, own, or enjoy the property. There are five major categories of real estate, which are:
1. Residential Real Estate: This usually includes any property where people live, such as condominiums, single-family homes, and duplexes.
2. Industrial Real Estate: This is any property mainly used for production, manufacturing, distribution, storage, research, and development of products. Examples include power plants and factories.
3. Commercial Real Estate: This mainly consists of property used only for business purposes like clinics, offices, grocery stores, and pharmacies.
4. Land: This is typically any vacant, undeveloped, or agricultural property such as a ranch or farm.
5. Special Purpose: This refers to any property used for public purposes, for example, government buildings, mosques, and schools.
When defining real estate, it is crucial to distinguish it from personal property. While the latter is movable – furniture, vehicles, electronics – real estate is immobile and unique.