What Are the 3 Types of Real Estate, and what makes them so different? The term real estate covers both land and buildings and has many uses, from industrial and commercial to residential. Personal property does not have a physical connection to the land and includes items such as vehicles, boats, jewelry, tools, and even the rolling stock of a farm. Here are some common examples. Let’s take a closer look at each of these types.
Raw land
The first consideration when investing in raw land is to consider the market conditions in your area. The price of raw land in an area will depend on the zoning laws of the area. If the land is vacant, it is difficult to find a lender willing to offer a loan, which limits your investment options. Also, zoning laws can make property difficult to develop or sell if the zoning does not allow for the development of that property.
The downside of buying raw land is that you’ll have to pay for a myriad of permits in order to build on it. You’ll need to have the land surveyed and clear away natural obstacles. You’ll also have to pay for utilities, which can be expensive. A real estate agent can guide you through the process and help you find the financing you’ll need to make the purchase. While it may be tempting to buy raw land without a real estate agent, it’s important to know what to expect from the purchase.
Farmland
Real estate that is not in the market right now is called farmland. Unlike commercial real estate, which is more volatile and has boom-bust cycles, farmland appreciation is steady and relatively consistent. In fact, the NCREIF Farmland Index is now worth about $12 billion, compared to $768 billion for commercial real estate. If you want to invest in farmland, you can use a digital platform such as FarmTogether.
Buying farmland can be a good way to diversify your portfolio and protect against inflation. The value of farmland property will steadily increase in value over time, and you can invest a small amount of cash to purchase a large asset. Another benefit of farmland is that it doesn’t depend on crop production or the amount of food that is consumed. So, you can purchase a farm for a very low price and wait for the value to rise gradually.
Industrial real estate
Once considered a niche asset class, industrial real estate has gained traction as a viable investment opportunity. In an age when more consumers shop online than ever before, companies compete for customer loyalty through same-day or two-day shipping and distribution. With these factors in mind, industrial real estate can be an ideal asset class for investors looking for long-term cash flow. In addition to being a stable investment, industrial properties tend to appreciate in value, making them an ideal hedge against inflation.
One common type of industrial property is Class A. These properties are often the newest and most high-tech structures on the market. These buildings feature high-quality materials, tall ceilings, and top-of-the-line utility systems. They are often considered low-risk investments and often attract high-income tenants. The low vacancy rates and high-end amenities of Class A buildings make them ideal for investors seeking to invest in industrial properties.
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