Real Estate and What should You know about it?
Real Estate, What Is It?
Real estate is the property, land, buildings and rights of natural resources (air, water, flora and fauna, etc.) above and below the land. Real estate can also be defined as producing, buying and selling property consisting of land or buildings. Real estate is one of the best asset class to preserve and grow your money.
Types of Real Estate
- Residential real estate
Residential real estate is an area developed for people to live on. Residential real estate are the easiest to finance due to low start-up costs. It includes the construction and resale of homes. There are many types of residential real estate such as duplexes, triple-deckers, quadplexes, high-value homes, vacation homes and most commonly is the single-family homes.
2. Commercial real estate
Commercial real estate is any non-residential property solely used for business. Commercial real estate generally has a higher start-up compared to residential but will generate more revenue as well. It includes hotels and offices, shopping centers/strip malls, medical and educational buildings. Apartment buildings are not commercial, but residences. People will generally classify apartment buildings under commercial because they are owned to produce income.
3. Industrial real estate
Industrial real estate is land and buildings either utilized or suited for industrial activities. Generally financed by companies to product their products. Industrial real estate includes manufacturing facilities, warehouses, distribution centers and research and development space. Some buildings that distribute goods are considered commercial real estate. Zoning, construction and sales are handled differently from other real estate, which makes the classification important.
4. Raw Land
Raw land is land that does not have certain basic required services necessary to utilize it for other purposes. Generally hardest to finance. It includes vacant land, working farms and ranches. It has more natural resources such as minerals, forest products and water.
Real Estate Compared to Other Asset Classes
There are many types of asset classes, such as stocks and equity, debts including fixed income/bonds, money markets or cash equivalents and the largest of them all real estate.
Stocks and Equity worldwide has a value of 73 trillion dollars.
Debts/Fixed Income/Bonds/ are at 215 trillion dollars worldwide.
Money Markets or Cash Equivalent worldwide has a value of 90.4 trillion dollars.
Real estate as the highest of all asset classes is at 217 trillion dollars worldwide.
Who can get into Real Estate?
Before today’s technology real estate was only for people that were well off. Now a days you can easily get into it through equity crowdfunding.
How the Real Estate Business Works
Real estate is about people, properties, deal making and value creation. Real estate has asymmetric risk and reward. Low-risks equates to low profits, while high-risks gives higher profits. Fortunes have been made and lost in real estate and real estate has mobilized individuals to stardom such as Barbara Corcoran, Donald Trump and Lee Shau Kee.