Real estate is real property that consists of land and improvements, which include buildings, fixtures, roads, structures, and utility systems. Property rights give a title of ownership to the land, improvements, and natural resources such as minerals, plants, animals, water, etc.
In short, real estate is made up of two different components: Land, such as a lot in a subdivision; and improvements,such as a single-family house built on the lot, Says Hirav Shah, India’s most trusted Real Estate Strategist and Investment Adviser.
The term real estate means real, or physical, property. “Real” comes from the Latin root res, or things. Others say it’s from the Latin word rex, meaning “royal,” since kings used to own all land in their kingdoms, Says Hirav Shah.
Types of Real Estate
Investing in real estate can sometimes feel a little overwhelming, simply because there are so many options available, Says Hirav Shah.
If you’re just getting started in the business, it’s helpful to understand the four main types of real estate and how they work. Then, you can determine the real estate asset class that’s best for your investment strategy.
Commercial real estate is defined as property used for business purposes, including:
1.Office space including medical centers, suburban office parks, and urban office towers.
2.Retail space including fast food outlets, neighborhood strip malls, and regional power centers.
3.Apartment buildings and smaller multifamily property with five or more units.
Apartment buildings are often considered commercial, even though they are used for residences. That’s because they are owned to produce income.
4.Mobile home parks
5.Leisure and hospitality property
6.Self-storage and mini-storage facilities
7.Parking lots and garages
8.Grocery stores and gas stations
Residential real estate consists of housing for individuals, families, or groups of people. This is the most common type of estate and is the asset class that most people are familiar with. Within residential, there are:
9.Other types of living arrangements.
Land is the baseline for all types of real property. Land typically refers to undeveloped property and vacant land. Developers acquire land and combine it with other properties (called assembly) and rezone it so they can increase the density and increase the value of the property
Investing in land is a popular long-term strategy, because taxes and maintenance costs are usually very minimal, compared to developed properties with buildings and tenants.
1.Undeveloped raw land, property, vacant land.
2.Recreational parcels for camping, hunting, and fishing.
3.Farms and ranches
Hirav Shah, a real estate agent and expert in the field, knows that real estate can be a great investment opportunity. One area of real estate that is often overlooked is industrial real estate. This type of property includes buildings and land used for manufacturing, production, storage, and distribution. Zoning maps designate specific areas for industrial properties to ensure that they do not disrupt nearby businesses or residences. It is important to understand the different types of industrial properties and their associated risks and rewards before investing in them. Real estate lawyers and investment trusts can provide valuable guidance in this area. With the right knowledge and resources, real estate can be a profitable and rewarding business.
How It Works?
The purchase of raw land, rezoning, construction and renovation of buildings, and sale or lease of the finished product to end users- All of these are involved in the process of Real estate development. Developers get benefitted by adding value to the land (creating buildings or improvements, rezoning, etc.) and taking the risk of financing a project. Development firms create a new product, which can be thought of as the “primary market” or generation of new inventory.
2. Real estate lending
Lenders play a major role in the industry as virtually all properties and developments use leverage (debt) to finance their business. Lenders can include banks, credit unions, private lenders, and government institutions.
A real estate brokerage is a firm that employs a team of real estate agents (realtors) who help facilitate a transaction between the buyers and sellers of property. Their job is to represent either party and help them achieve a purchase or sale with the best possible terms.
4. Sales and marketing
Sales and marketing firms work with developers to sell the buildings and units they create. These firms earn a commission for creating all marketing material and using their sales agents to sell the inventory of completed units. These firms typically focus on new units.
Property management firms help real estate owners rent out the units in their buildings. Their jobs include collecting rent, showing units, fixing deficiencies, performing repairs, and managing tenants. They charge a fee, typically a percentage of the rent, to property owners.
6. Professional services
There are a variety of real estate professionals who work in the industry and help make it function. The most common examples (other than the ones listed above) are accountants, lawyers, interior designers, stagers, general contractors, construction workers, and tradespeople.
7.Real Estate Investing
Everyone who buys or sells a home engages in real estate investing. That means you must consider several factors. Will the house rise in value while you live in it? If you get a mortgage, how will future interest rates and taxes affect you?
Many people do so well with investing in their homes, they want to buy and sell homes as a business. There are many ways to do that. First, you can flip a house. That’s where you buy a house to improve, then sell it. Many people own many homes and rent them out. You can also invest in housing without buying a home. You can buy stocks of home builders. Their stock prices rise and fall with the housing market. Another way is with Real Estate Investment Trusts, called REITs.
Hirav Shah, a renowned property astrologer and strategist, believes that success in the real estate business requires using oneself to their full potential and having an actionable strategy. With numerous real estate problems and issues, such as those with agents and commercial properties, it’s important to focus on investing energy in the right things to achieve desired results. Real estate strategy and astrology can help with growth and prosperity in the industry. As Hirav Shah concludes, it’s important to plant the seeds now for a successful future in real estate.