Know your Property, How many types of real estate are there
and what are they
As a new real estate negotiator I was taken aback when I
realized just how diverse the real estate industry is and the many
avenues and opportunities available for
anyone interested in investing in the industry.
This will be a 2 part guide to all the possible types of
real estate out there.
Part 1 will be a deep dive into the first 3 real estate
categories where I will provide examples of property types in the category, the
attributes of the category and the individual property types in the category
and what factors into valuing the property.
Part 2 will be a deep dive into the last 3 real estate categories
where I will provide examples of property types in the category, the attributes
of the category and the individual property types in the category and what
factors into valuing the property.
Part 1: The 5 Types of Real Estate
When it comes to properties concerning real estate;
everything out there in the industry can be classified in one or more of the
- Special Use
Part 2: What makes Real Estate Residential, Commercial and
1. Residential Real Estate
Undeniably the most popular form of real estate out of the
5. When most people refer to real estate, it’s more than likely they’re
referring to the residential aspect of it.
Any building built or under construction for
housing permanent or semi-permanent residents are qualified to be in this
These areas are defined by the zoning laws in a country
and typically require special
permission to convert into another type of real estate such as commercial.
Examples of Residential Real Estate:
- Single Family Homes:
The building is a structure built, maintained and used as a
single dwelling unit for housing a single-family. Spare bedroom
accommodations do not change the description.
When a family owns a second single-family home which is also
used for non-commercial personal use. The home which is used less often is
referred to as a ‘Vacation Home.’
- Multi-Unit Properties (Duplex, triple-deck,
Renting out a room(s) in a single-family home will not
change it into a multi-family home. What distinguishes the two is the fact that
in a multi-unit property; each unit must be self-sustainable and independent.
Own address, kitchen, bedroom, bathrooms and typically a
private entrance space
- Apartment Buildings
A single standing structure that is made up of smaller
separate residential units (apartments). Residents typically only have private
ownership of their unit and appointed parking area.
What Makes Residential Real Estate Valuable
Location affects the price of residential properties with
special attention to crime rates, aesthetics, and ease of access to popular
desired destinations and other neighborhoods. The price rises and falls with
the proximity range of the above to the property.
A property in a nice neighborhood, with a low crime rate and
easy access to the major highway of location will be demanded far more than one
that’s lacking those traits and as such; will be priced higher.
- Surrounding development/development potential
This factor could be considered a subset of the above
location factor. The closer the property is too specific commercial developments
such as hospitals, schools, and shopping centers the higher its commercial price
will likely be.
The reputation of these establishments contributes to the
price of the nearby properties.
As well, an area that has the potential to be developed with
such establishments (Large open non-wetland areas) could play a factor in
raising the price of property near that location
- House Properties
The individual property size, design, condition, age and
developments will have a significant influence on the price of a property
especially concerning neighboring properties.
Larger homes sell more than significantly smaller
homes but the age of the home contributes to just how big the pricing gap will
be. Much older homes will have the price discounted due to the expected
renovations needed to maintain or update necessities such as wiring or worn out
aspects of the home.
If an older home has been maintained in great condition. its
price could be the same or set at a premium as it is considered to have been
built with more dedicated practices.
- Historical Sales Price
All things being equal, the price to which the home has been
sold for in the past while accounting for inflation is a good indicator of its
expected to sell price in the future. Changes in the previously stated factors
work to influence this; positive changes will raise the price in the same way
that negative changes will decrease it.
The ultimate factor to price comes down to; how many people
in a specific income range want a home in that location.
2. Commercial Real Estate
The backbone of most societies rests within commercial real
estate. The last place you made payment to most likely operated in a commercial
real estate establishment.
Structures that are built, maintained and used for the
purpose of generating profit is held within the category of commercial real
Zoning laws establish specific areas that can be used to
hold the following commercial properties.
Examples Of Commercial Real Estate:
- Shopping centers
A group of business structures in a specific area that all
operate to generate profit through products or services.
(Westgate shopping center, Sam Levy’s and Avondale Shopping Centre)
A structure that offers short-term paid lodging for
individuals. (Rainbow Towers, Holiday Inn, Cresta hotel)
A structure primarily used for supportive administrative
work that aims to benefit other areas of business in generating profit. ()
- Educational Buildings
A business structure to generate profit
through the exchange of teaching skills for pay. (Hellenic Academy, Alliance
Francaise, IMM )
- Medical centers
Any building that houses medical professionals who offer
their services and products for pay to generate profit. (Lancet, Baines 24, Parirenyatwa)
For the tenant, an apartment is a residential real estate
property but for the owner of the complex who charges rent to the tenant; it is
considered a commercial real estate property. ()
What Makes Commercial Real Estate Valuable
Location as a value factor for commercial real estate shares
most of the same reasoning for residential real estate. An area with a known
track record of an ‘attractive’ neighborhood has commercial real estate that
will be charged at a comparative discount.
The following factors are some key location factors that
specifically, influence the value of commercial real estate:
- Traffic count
Commercial real estate located in a high traffic area provides
greater sales and marketing opportunities for the business. this bolsters the
value of the property for any prospective business; areas with low traffic
values inversely have less value and price bargaining power.
- Surrounding commercial property
A property located within a moderate range of a diverse
the concentration of other commercial properties (shops) becomes more valuable for
a prospective buyer and as such can sell for a premium.
This because this type of concentrated commercial area is
more likely to attract more customers than an area with fewer commercial
properties within the same range.
This fact still applies if there are multiple competing
businesses within the range; zones that offer variety within a moderate boundary
for customers to attract more customers.
- Parking space and Accessibility
The value factor trend for commercial real estate can be
summed up to “just how easy is it for prospective customers to come, stay
and interact with the property.”
Relating to the above statement, you can see why having an
expansive parking space and the easily accessible building would go towards adding
a premium to the property.
if you were to examine popular shopping centers you’d likely
realize just how much space and dedication was put into creating an expansive
and orderly parking area.
3. Industrial Real Estate
Structures that created, maintained and used for either
manufacturing, assembly, warehousing or distribution constitute as industrial
Examples Of Industrial Real Estate:
For all but the largest of businesses in need of industrial
real estate, it is typically the case that a single industrial property houses everything
from manufacturing, assembly, warehousing and distribution buildings within the
same property boundary.
The separate structures aim to do the following:
- Manufacturing buildings (production and
This building type will usually come packaged together with
an assembly plan and has the ultimate goal of producing an end product for a
- Warehouse buildings (storage and distribution)
This building type holds both finished and unfinished
products before they are dispatched for either completion or final delivery.
What Makes Industrial Real Estate Valuable
For industrial real estate, location’s power in influencing
value is primarily linked to road route access and convenience. Industrial real
estate structures will focus on the use of large vehicles to transport large
quantities of parts and products.
The faster and easier it is for vehicles to access large
main roads or the closer they are from average pick up and drop off zones the
more valuable the property becomes.
If vehicles have to commonly use small, crowded,
inconvenient roads, the property becomes vastly less desirable and valuable.
- Design and Infrastructure
Onto factors of the actual property that influence vale.
Access to reliable water and electricity is crucial for
industrial real estate.
Having an expansive open area to fill with heavy duty
machinery or working stations is more important than office space.
High cargo bays that can clear large vehicles for drop off
and pick up also adds to the value of the property.