What Is Real Estate?

Real estate is a lucrative industry that can involve purchasing, renting, or selling

properties. Real estate can also be a wise investment since it typically appreciates

over time and offers tax benefits. In addition, a home can provide a steady stream of

income through mortgage payments and equity build-up over the years. Many

people invest in real estate either for their own use or to secure financial

independence. Others may work in the real estate industry as realtors, brokers,

builders, and developers.

Real property consists of land and any permanent additions to it, like buildings or

infrastructure. This type of property differs from personal property, which includes

items that are not attached to a land-based item, such as furniture or vehicles.

Although a structure can be torn down, the labor and capital put into an

improvement on land usually represents a substantial fixed asset. Real estate can

be broken down into five categories: residential, commercial, industrial, raw land,

and special use.

Residential real estate is land used for housing purposes, including single-family

homes, townhomes, condominiums, duplexes, and multifamily rental properties with

four or more units. Unlike personal property, which can be moved from place to

place, real estate is immovable and is an important investment for most families.

Commercial real estate is land that is used for business or employment-related

purposes, like office buildings and strip malls, and produces revenue from the sale of

goods or services. Often, commercial real estate is owned by businesses rather than

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Raw land is undeveloped or uncultivated land, such as farmland and vacant lot. Raw

land is less expensive than developed real estate and is more flexible in terms of

use. It’s also important to note that raw land does not include areas that are

reserved for public use, such as parks, schools, and cemeteries.


Whether you’re looking to start a career in real estate or simply want to understand

how it works, it’s helpful to know what separates real estate from other types of

investments. The main difference is that while most investments have a lower resale

value than the initial purchase price, real estate tends to appreciate 4% per year in

the United States. This means that a house purchased for $300,000 will be worth

$444,750 after 10 years. This increase in value can help you build equity and take

advantage of specific tax laws. In addition, a well-maintained home can be a good

source of income through rental payments.