Real estate is the property consisting of the actual buildings and land on it, and its accompanying natural resources like water, rocks or crops; and its attached economic value including crops, capital goods or cash invested in it. Real estate investment refers to the buying and selling of real estate, which can be land, plots of land, residential houses or apartments, industrial plants, office complexes or warehouses, etc. Real estate investment is one of the fastest growing fields in today’s market and has become a part of everyone’s lives. Real estate markets can either be small-scale and local, or large-scale with huge investments from multinational companies.
While real estate can be divided into two main categories: fixed assets and variable assets, it depends on how these assets are used that determines their classification. Fixed assets include lands, buildings, underground utilities, etc. whereas the variable assets are those that can be improved, increased or modified. Fixed assets are mainly used to create a permanent place of residence such as houses, apartments, office complexes, commercial or residential zones, hospitals, etc., while the variable assets are those that can be bought or sold to create a profit or loss for the business or the investor. In some cases, both the types of assets can be combined to create more profitable ventures.
There are many different types of economic activities that take place on a piece of land. Land can be used for agricultural purposes such as growing crops and forests, cattle ranching, mining, construction, etc. It can also be used for recreational purposes such as golf courses, resorts, hotels, spas, swimming pools, beaches, parks, resorts or hotels for recreational or business purposes. The main types of economic activities that take place on land include residential development, commercial development, industrial development, and industrial expansion. Residential development takes place when people make additions to their houses, build houses and build homes on land that is acquired for this purpose.
Commercial real estate, on the other hand, involves all the activities associated with property rental and sale to the end users. It includes office buildings, shopping malls, hotels, industrial centers, industrial and office parks, office complexes, industrial real estate, and vacant land. This type of property management deals with maintaining the existing properties of the property owners. It also manages new developments and takes care of the property buyers and tenants.
Rental property management involves the maintenance, repair and organization of the residential part of the property. This type of management services the residential tenants of the real estate by taking care of their maintenance needs. It also organizes tenant bondholders’ meetings, maintains the property owner’s records and collects rents. Most investors in real estate to invest in rental property because they use it as an investment tool and not only as a residential unit for their family and relatives.
Real estate investors who have enough money to invest usually opt for the purchase of vacant land or vacant building instead of purchasing a new home. They make an offer to the owners of these lands and ask them to sell it within a specific period of time. The price asked by the owner depends on the prevailing market rates. If the deal is finalized, then the real estate investor gains profit on his investment.