Are you curious about the types of real estate? If you’re interested in the real estate industry, understanding the types of real estate is important.
Whether you’re considering becoming a real estate agent or an investor, you might need to know the types of real estate. Let’s look at the different types of real estate and a description of each one.
What is Real Estate?
When you hear the term “real estate” you likely think of homes or commercial properties. Real estate is often called real property. TheBalance.com defines it as, “land plus any other tangible improvement that might rest upon it or be installed in it.”
Four Different Types of Real Estate
1. Residential
This type of real estate is the most common and includes several other types of real estate. Any property that people live within is considered to be residential real estate. We will cover more types of real estate in this category later in this article.
2. Commercial
This type of real estate includes shopping centers, retail stores, restaurants, educational buildings, hotels, offices, and even medical buildings. Sometimes, apartment buildings are found in the commercial category, but they are more likely found in the residential category.
3. Industrial
Manufacturing buildings, warehouses, factories, and storage facilities are found in the industrial category of real estate. There can be some industrial properties that fall into the commercial category, too. Often, this classification has to do with the local zoning for the area.
4. Land
Of course, another type of real estate is land. Any type of working farm or ranch will fall under this category, along with vacant land.
Types of Residential Real Estate
While the four types of real estate above are the most common, residential real estate is the most commonly talked about. Most real estate agents work with residential real estate. It’s also the most common for investors.
There are several types of residential real estate to consider. Let’s look at each different type below.
Single-Family Homes
The most common type of residential real estate is a single-family home. This type of real estate is found all over the world and includes detached and attached homes. A single-family home won’t share walls with any neighboring properties.
Townhomes
While townhomes tend to fall under the single-family home category, they are separate from the standard home. Townhomes will often have two or more floors with side walls shared with other properties. Each townhome in a complex tends to be rather identical. There will be no neighboring properties above or below the townhome, however.
Often, townhomes are found in complexes with amenities, such as a swimming pool, tennis court, fitness center, and more. When getting a mortgage, it’s common for lenders to treat a townhome as a single-family home.
Condominiums
A condominium is found in a building, often a tall building, and it’s much like an apartment. However, you can own a condominium inside the building instead of renting it. You will likely pay an association fee for the repairs and common area maintenance.
Condominiums may also come in the form of condotels. These are a hybrid between a condominium and a hotel. They may come with cleaning services, telephone services, and other hotel services. It’s also common that owners will use these condos as vacation homes and rent them as hotels when not using them.
Condominiums often have amenities within the building. They may come with swimming pools, walking paths, tennis courts, pet play areas, and more.
Multi-Unit Properties
Any property with two or more units can be considered a multi-unit property. These properties are common for investors and may be called duplexes, as well. they can also be treated as a primary residence, where the owner can live in one unit and rent out the other units.
Multi-unit properties tend to come in either three-unit or four-unit options or larger. An apartment complex can also fall into this category.
Manufactured Homes
This type of residential real estate is often called a mobile home. However, it doesn’t necessarily have the mobile ability of a mobile home. A manufactured home can be affixed to a foundation and may need to be approved for a mortgage.
It’s not uncommon for manufactured homes to be found in mobile home parks where the land is leased. They can be used for low-income housing or even for a lifestyle community for senior citizens or others.
Modular Homes
Another type of home pretty similar to a manufactured home, modular homes don’t have an axle or a frame. They have to be moved with a flat-bed truck and they can be a bit harder to finance than other types of residential real estate.
Vacation Homes
While any of the properties found in the residential real estate category can be a vacation home, it’s common for these properties to be found on resorts. Condos and single-family homes make great vacation homes, along with townhomes. It’s not uncommon for those owning these homes to rent them out for most of the year, but use their property for a few weeks or months out of the year.
Snowbirds may spend a large portion of their year living in a northern state and have a vacation home in Florida, Arizona, or New Mexico. They will spend the winter months in their vacation home but may rent it out for the rest of the year.
Investment Properties
Any of the residential property types can work as an investment property. Simply put, an investment property is a non-owner-occupied property that is used to create a profit. Investopedia.com says an investment property is “real estate property purchased with the intention of earning a return on the investment either through rental income, the future resale of the property, or both.”
You can buy an investment property to rent out as a regular rental or vacation rental. It can also be sold for a profit in the future.
These are the types of real estate. If you plan to become a real estate agent, you will likely work with the type of residential real estate listed here. Some agents specialize in a specific type of real estate.
