CandleFocus

Real Estate

Real estate is tangible property that comprises both land and anything permanently affixed to it, whether natural or man-made. It is categorized in five main types: residential, commercial, industrial, raw land, and special use. The residential market involves purchasing a residential unit such as a home or apartment. While commercial real estate may include purchasing office buildings or shopping centers, industrial real estate involves purchasing manufacturing warehouses.

Raw land involves land that has yet to be developed and can be used for a variety of purposes such as farming and residential/commercial/industrial development. Finally, special use involves purchasing real estate for such specific purposes as educational, religious, and hospital properties. Regardless of the type, investing in real estate can be extremely beneficial, both financially and socially.

Real estate can be purchased in two ways-directly or indirectly. Direct real estate investment involves purchasing a home, land, or rental property. Indirect investment involves investing in a Real Estate Investment Trust (REIT) or via pooled real estate investment.

In investing in real estate, one must consider the risks and rewards associated with the particular type of real estate purchase. For instance, purchasing an apartment to rent out may yield monthly rental income, but the investor is responsible for all potential tenant-related issues such as repairs and management of the rental property. Additionally, note that residential real estate can fluctuate in value depending on the local real estate market.

Real estate investing can be a rewarding long-term financial strategy if executed correctly. By investing in real estate, one can gain capital appreciation, rental income, and tax benefits. Moreover, one can become a stakeholder in the Bay Area or local economy, as well as create a lasting legacy that can be passed on to future generations. As with any investment, however, proper research, evaluation, and management are essential in order to maximize one’s real estate investments.

Glossary Index