What are the different types of real estate?

In real estate, there are four different types: residential, commercial, industrial, and land.

Residential

Residential properties are that are sold to be lived in. They tend to be newly constructed houses or resold houses, and typically are single family homes. However, condos, apartments, townhouses, and any property meant to be lived in falls under the residential umbrella.

Industrial

Industrial property is a manufacturing property, such as a factory or processing plant. There are typically three zones of industrial real estate: light, medium, or heavy. Warehouses, distribution centers, and garages are also considered industrial.

Land

Land real is typically vacant land that is to be later developed into one of the other types of real estate. There are also subdivisions of land real estate, such as undeveloped, early development, or reuse.

Commercial

The definition of a commercial real estate refers to a building that's intended purpose is to generate a profit.  Retail is technically considered commercial real estate, as opposed to residential, but they are categorized as separate sub-groups of commercial property.

Commercial real estate accounts for offices, medical buildings, education buildings, and hotels. Retail is also a commercial zones property, but it is correctly zoned for business purposes, i.e., a place that sells a product, not manufacturing it. Storefronts, shopping centers, and malls are considered retail real estate.

Types of commercial leases

Out of all the real estate properties, commercial properties tend to have more varying contracts.

Single net lease

A single net lease is where the tenant pays the rent and property taxes.

Double net lease

A double net lease is where the tenant pays the rent, property taxes, as well as insurance.

Triple net lease

A triple net lease is where the tenant pays the rent, property taxes, insurance, and maintenance.

Gross lease

A gross lease is where the tenant only pays the rent. The landlord pays the property taxes, insurance, and maintenance costs.

If you are considering becoming a commercial property owner, you need to view all of the nuances that come with leasing the space. You should also keep in mind these other key factors to successfully owning commercial real estate.

1. How appealing is the building?

How does the building look? Does it need of upkeep? What will potential customers or tenants see when they come across this building? 

2. Does the building have a beautiful entrance?

A sale can be made based on first impressions alone, so make sure your entrance is aesthetically pleasing. Putting in the extra effort to make it welcoming and tasteful could lead to a successful conversion to a tenant, and more conversions for their clients.

3. Is there an abundance of natural light?

Natural light has been in higher demand lately, so it might be wiser to invest in a building with many windows. 

4. Is the location, right?

How close is the building to other amenities, public transportation, other offices? Is there ample parking onsite or nearby? Keep these in mind before you venture in commercial real estate ownership because operating a building in a specific location could be more profitable than somewhere that has nothing to offer tenants.

Hopefully, you have a firmer grasp on the distinction between the different types of real estate, and if you plan on owning commercial property, you can be best prepared to lease it.