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What is real estate?

 What is real estate?

What is real estate?


Would you like to invest in real estate? This article tells what real estate is, which types of real estate there, and how to invest in them. Do you know the difference between personal property and real property (real estate)?


What is a real estate, and what types of real estate are there?

Real estate, real estate in English, refers to land and any physical property or improvements placed on it, including gardens, houses, walls, etc. In turn, a property is an asset that is inseparably attached to the ground, physically and legally. Buildings and land are real estates. We can group real estate into three groups: residential, commercial, and industrial. Examples:

Residential: Undeveloped land, houses, condominiums...

Commercial: Office buildings, warehouses, retail store buildings...

Industrial: factories, mines, farms...

After this brief introduction to real estate, we will discuss the difference between personal property and real property, how real estate works, and why they are important.


Real Estate: personal property and real property 

First, we are going to differentiate between personal property and real property.

Personal property or personal property includes intangible assets, such as bonds, stocks, or other investments. It also includes tangible assets such as furniture, computers, beds, or clothing.

The real estate ( Real Estate ) is within the real property (real estate). Real property is a less used term and includes real estate plus a series of rights over it. This set of rights includes the possibility for the owner to use her property as she pleases. In short, the Real property includes physical objects and rights over them, while real property is only physical objects.

The rights that the owner has over his property are divided into 5: right of possession, right of enjoyment, right of control, exclusion, or right of disposal.

  • Possession: the right to occupy the property.
  • Enjoy: right to use the property without external interference.
  • Control: the right to determine one's own interests.
  • Exclusion: the right to reject the interests of others.
  • Disposition: the right to determine if the property is sold or transferred to another party and in what form.

Real estate: how does it work and how to invest in it?

There are a wide variety of ways to invest in real estate. They range from investing in Real Estate Investment Trust (REITs) to buying or renting multi-family homes.

For investors who are not interested in the idea of ​​taking over a house and having to "look after" their tenants, there are REITs, which offer the opportunity to be able to participate directly in the property or in the financing of projects. Real estate.

The REITs are negotiable as a set of assets of real estate. The REITs can generate income from real estates such as office buildings, apartments, shopping centers, warehouses, and hotels. Many of the REITs specialize in only one type of real estate.

Most investors decide to buy REITs because of their good dividends, although they are usually fully taxable. All real estate sectors are affected by different business cycles. Therefore, the more diversified, broad, and geographically encompassed, the less exposed you are to regional weakness and economic cycles. A smaller REIT will have higher volatility, but you can get more growth potential.

Real Estate: why is it important in our investments?

As we have discussed in the previous section, real estate, in addition to having a real value that investments can understand, touch, and feel, can be an excellent tool to diversify. If you pay the proper price for a property, there is a good chance of having consistent long-term potential earnings as a homeowner.

Portfolios with real estate tend to outperform those without real estate in the long run. Also, the risk that real estate has is reduced compared to the stock or bond markets.

I hope the post will help you to understand perfectly what real estate is and the different ways to invest in it. Would you do it? And if you are already an investor in real estate, we want to know your experience! What type of real estate have you invested in, and why? We read you in the comments.

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