What is Real Estate?

by | Oct 14, 2022


Real Estate refers to land and any valuable improvements attached to it; natural or man-made. The improvements could include permanent structures like a home. It is good to distinguish between real estate property and personal property like cars and jewelry. Real Estate falls under five major categories as follows:

  • Residential Real Estate
  • Commercial Real Estate
  • Industrial
  • Special Use
  • Raw Land

Types of Real Estate

1. Commercial Real Estate

It includes land set aside for commercial purposes or permanent buildings for commercial use. Commercial property includes the following:

  • Apartment Complexes
  • Gas station
  • Parking facilities
  • Restaurants and Hotels
  • Hospitals
  • Grocery Stores
  • Shopping Centers and Stores etc.

Realtor experts require a more complex accounting method to evaluate these kinds of properties. The evaluation should include the following aspects:

  • The property’s appreciation potential
  • Cash flow without owner perks
  • Historical revenue etc.

If you want to join this Real Estate specialization, you need extensive business evaluation. Contrarily, if you lack this skill, ensure you acquire experience in residential property or underdeveloped land Real Estate sectors.

However, if you are careful and engage well in this specialization, you will enjoy encouraging returns.

2. Residential Real Estate

Residential Real Estate consists of all properties, particularly for residential use. They include the following:

  • Single-family homes
  • Condos
  • Duplexes
  • Townhouses
  • Multi-family houses etc.

It is the most common and popular among old and new real estate investors and developers. Furthermore, they can be existing homes for sale or new constructions.

As a realtor investor, you may consider purchasing a home at an auction at a cheaper price for reselling. However, you might need to invest in it more before placing it on the market for sale or rent to make a satisfying profit.

If you want to maximize this, you need to stay up-to-date with your regional website to learn about property auctions and their dates.

Residential property is a promising investment, but only if you can keep track of the Real Estate market. For example, property prices keep fluctuating, the higher the price, the less you gain as returns on Investments.

3. Vacant Land

Vacant land has many ways of generating wealth without erecting buildings. It mainly comes in handy for agricultural purposes like running ranches, orchards, farms, timberlands, etc. however, land investment has several ways of paying off. For instance, you can buy land to rent, buy to resell or buy and build.

Nonetheless, there are some factors you must consider before investing in vacant land.

  • Location
  • Size of the property
  • Market price
  • Potential for appreciation
  • Productivity

It is also crucial to consider essential amenities such as water and power supply if you are buying vacant land for development.

As a Real Estate agent, buying large pieces of land is more advantageous as the price is higher and so is the commission. Additionally, it helps to have a periodic professional inspection of the land, especially if you are buying for agricultural purposes.

4. Industrial Real Estate

The industrial category involves all property for manufacturing, processing, distribution, production, research and development, and storage.

The other minor category of real estate is the special-purpose property for public use. Examples include cemeteries, government buildings, libraries, parks, etc.

Careers in Real Estate

Real Estate is among the widest fields where you can explore many careers. Here are some career paths to take in this sector.

1. Real Estate Investor

A Real Estate investor buys a property and maximizes its profits and then sells the investment. It is a popular and among the best-rewarding Real Estate careers. A successful Real Estate investor researches and knows where and when to purchase a property and when to place it back on the market.

Before becoming an investor, you need to gather extensive knowledge of the realtor market to avoid losing money and investment. Below are some key qualities of a successful realtor investor:

  • Readiness and willingness to take the risks that come with the venture
  • Have adequate funds to purchase land or other properties
  • Ability to identify top-notch properties for sale and evaluate their profitability
  • Proper understanding of all types of real estate, and different realtor investment techniques

Becoming an investor has many advantages like the fact that you can start investing with little money.

2. Real Estate Broker

Real Estate brokers and agents are pretty similar, except for whom each serves. Brokers can choose to operate independently or start their brokerage firm. Contrarily, a realtor agent works with a brokerage firm. If you have an entrepreneurial spirit, becoming a Realtor broker might serve you right.

You become a broker by taking a course in the field, or you start by working as a realtor agent.

3. Real Estate Agents   

It is the most common real estate career. An agent’s responsibility is to assist individuals to identify and buy or sell a property. You can be a commercial or residential agent. Similarly, you can be a seller’s or buyer’s agent.

As a residential realtor agent, you specialize in facilitating the home-buying process between buyers and sellers. You can choose to focus on a single line such as single-family homes. Condos, vacation homes, etc.

Commercial realtor agents concentrate on the commercial property sector. However, you need analytical knowledge in finance and business to succeed in this career. The knowledge will enable an understanding of the crucial data that commercial agents handle. Check this crucial data in commercial Real Estate:

  • Gross Rent Multipliers
  • Internal Rates of Returns
  • Capitalization Rates

4. Real Estate Developers

Developers purchase vacant land and erect properties on it for sale or rent. It is a developer’s duty to finance, coordinate, and plan the construction of all buildings; residential or commercial. They also find and bring on board a team of experts to execute the plan.

A wise and successful realtor developer works with the following experts to develop a property:

  • Engineers
  • Contractors
  • Realtor agents
  • Lawyers etc.

Additionally, you must have any of the following four-year degrees to qualify as a realtor developer:

  • Civil Engineering
  • Urban Planning
  • Business Real Estate
  • Finance

Project management skills are also necessary for the success of any developer.

How to Invest in Real Estate

Investing in Real Estate should not be a big hustle. Here are some ways you can join the market.

1. Rental Properties

Rental properties reward best if you have DIY renovation skills and excellent tenant-management skills. Additionally, it requires substantial capital investment for upfront renovation and to cover vacant months. Its primary benefit is a regular income and property appreciation. Contrarily, managing tenants could be overwhelming.

2. Realtor Investment Groups

Real Estate Investment Groups work best for investors who wish to own rental properties and not manage them. In this setup, a company may build or purchase rental property and then invite investors to buy from the company, hence joining the group.

3. House Flipping

House flipping is ideal for individuals with experience in marketing, property valuation, and renovation. It requires considerable capital and the ability to oversee or do the necessary renovations. Many investors love it for its quick returns. On the downside, it needs an intensive understanding of the market.

4. Real Estate Investment Trust

It is the best method for investors who want to avoid traditional Real Estate transactions yet expose their portfolio. A REIT comes up when a trust (corporation) uses an investor’s money to acquire property. Many investors love REITs for operating as standard dividend-sharing stocks.

Property investment is rewarding and worth the hustle. If you wish to join the market, then this information about Real Estate investment will be helpful.