Real estate is the top popular asset class. Before investing in real estate it is important to know the different categories of the real estate, their benefits, and also the drawbacks so that you can have all the details when choosing which one to invest into. Below are the different categories of real estate.
Categories of real estate
Real estate comprises of different categories. If you are planning on possessing, purchasing, or developing real estate you need first to understand the different categories of real estate. They include:
These comprises of structures such as houses where people live as a family, apartment buildings for renting for renting, townhouses, and vacation houses where people, or tourists pay to stay. People can stay there for as long as they want provided that they have paid for their stay. If they are to stay for a longer period of time they have to sign a lease agreement. In the United States, most residential houses are on an annually basis.
Commercial property normally refers to real estate, which is used for business activities. It comprises of buildings used to create income like skyscrapers and office buildings. You can take a part of your investments and build few buildings, which have separate offices and lease them to companies, or persons who are conducting business where they will be paying you rent every month for using your property. Commercial real estate commonly embraces multi-year leases. It helps to generate better stability in cash flow and also offer security to the owner when the rental rates go down. However, if the rental rates rise considerably within a short period of time it becomes difficult to contribute since the office building is still locked into the old agreements.
Industrial property refers to real estate, which is used for industrial purposes. Industrial real estate covers a vast variety of business types. They include buildings used as factories, or warehouses. Industrial warehouses are rented to organizations where they are used as distribution centers after approving on storage units, car washes, and other services where they receive income from potential customers who use the facility for only a short period of time. Industrial property charge an important fee and service revenue streams. The properties have benefits like they help generate higher yields, the leases are also longer and they require low maintenance costs.
These comprises of strip malls, shopping malls, and other storefronts. People pay for these retail properties depending on how they agree with the landlord. However, in some retail shops the landlord also receives a portion of sales generated by the occupant store in addition to the normal rent to induce them to keep the property in a decent condition.
A mixed-use property refers to real estate, which combines all the above types of real estate into a single project. Mixed-use properties are used for monitoring risks since they have a unit of built in diversification. It makes them more popular to people who own significant assets.
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