What is Real Estate?

Real estate is the land along with any permanent improvements attached to the land, whether natural or man-made—including water, trees, minerals, buildings, homes, fences, and bridges. Real estate is a form of real property. It differs from personal property, which are things not permanently attached to the land, such as vehicles, boats, jewelry, furniture, and farm equipment.

KEY TAKEAWAYS

Real estate is a class of "real property" that includes land and anything permanently attached to it, whether natural or man-made.
There are five main categories of real estate: residential, commercial, industrial, raw land, and special use.

Understanding Real Estate

People often use the terms land, real estate, and real property interchangeably, but there are some subtle distinctions.

Land refers to the earth's surface down to the center of the earth and upward to the airspace above, including the trees, minerals, and water.
Real estate is the land, plus any permanent man-made additions, such as houses and other buildings.
Real property—one of the two main classifications of property—is the interests, benefits and rights inherent in the ownership of real estate.

Types of Real Estate

There are 5main types of real estate:

Residential real estate: Any property used for residential purposes. Examples include single-family homes, condos, cooperatives, duplexes, townhouses, and multifamily residences with fewer than five individual units.
Commercial real estate: Any property used exclusively for business purposes, such as apartment complexes, gas stations, grocery stores, hospitals, hotels, offices, parking facilities, restaurants, shopping centers, stores, and theaters.
Industrial real estate: Any property used for manufacturing, production, distribution, storage, and research and development. Examples include factories, power plants, and warehouses.
Land: Includes undeveloped property, vacant land, and agricultural land (farms, orchards, ranches, and timberland).
Special purpose: Property used by the public, such as cemeteries, government buildings, libraries, parks, places of worship, and schools.

While most individuals begin and end their Real Estate with their own residential Real Estate, Real Estate can also be used as an Alternative Investment. You should always talk with your Financial Advisor to determine if an investment is suitable for you.

A Financial Element, similar to a literary element, refers to components of a Financial Narrative. Understanding the financial elements can help us in creating and planning Your Financial Narrative. We will continue to look at various other financial elements each week as a part of the Financial Fridays