Real estate refers to real property consisting of the buildings and land on it, and its accompanying natural resources like water, plants or metals; immovable real property of that nature. It is also known as the market value of property. Real estate today is divided into two types: residential and commercial. Within residential real estate, there are five categories: owner-occupied residential real estate, renters’ residential real estate, manufactured homes, and mobile homes.
Within commercial real estate, there are seven categories: apartment buildings, townhouses, condominiums, row houses, multiple unit dwellings (also called multi-family dwellings), mobile homes, vacant land, and vacant buildings. Vacant land refers to undeveloped land.
- There are many people who consider that the value of a property is mainly determined by the amount of money that can be spent on improving it (whether it needs a roof, new paint, fresh tiles, or a garage). However, the reality of the real estate business is that the value of a property largely depends on the state of the real estate market. The state of the real estate market generally means the current state of the mortgage loan rate, the real estate industry’s interest rates, the mortgage rates, vacancy rates, investment rates, and many other factors. Basically, these factors determine what the buyer’s market will look like in a particular area. For example, if there are more vacant buildings in an area than there are buyers, the prices of new buildings will generally be lower than existing buildings.
- An important aspect of the real estate market is the condition of the community. This is actually a critical driver. If a community has a lot of crime and problems with graffiti or poor hygiene, then these negative aspects will depreciate the value of real estate more than they would if the community was clean and well maintained. Also, if a community has a high number of abandoned homes, then these properties will depreciate more rapidly. The critical driver of the real estate market is the number of occupied homes in an area. If there are too many homes for sale in an area, then the prices of real estate will decrease.
- One other critical aspect of commercial real estate is its location. Land must be located on a large enough area to accommodate the business that will be generated from the location. Also, land can’t be concentrated in a certain area so that there isn’t enough room to develop the needed businesses or the commercial properties.
Finally, when it comes to investing in residential real estate, there are a couple of things to keep in mind. First, when investing in residential real estate, you have to make sure that the properties are developed properly so they fit into the surrounding residential community. Second, residential property tends to appreciate better than non-residential property. Finally, there are some special uses for residential real estate such as schools, shopping centers and hospitals.
When purchasing a piece of land, take careful time to do your research and evaluate your options. First, if you’re looking for a piece of land because you want to construct a new home on it, make sure to check out the local market. Look at the property and see what kind of homes are being built on that land. Then, if you’re planning to build a single-family house on that land, evaluate the demographics of the neighborhood and assess the economic characteristics of that neighborhood. These should help you choose whether to invest in the commercial property or not.
Comments are closed