Facebook
X
Pinterest
Copy Link
There are two main categories of real estate. One is residential and the other is commercial. I am going to breakdown all the options so you can better know what you’re looking to purchase or invest in.
Residential
The main goal with residential real estate is you are purchasing property to live in. You may be buying only land, land and the structure, or just the structure with no land. These properties are zoned for housing and you’re unable to utilize these for commercial use.
Single Family – When you purchase a single-family home you are buying the land and the structures erected on the land. Often times you do not have shared walls, shared spaces, or homeowner associations (HOA). A big pro to purchasing a single family home is you tend to have more space from neighbors and even a yard. You are responsible for the full maintenance of the property both inside and out.
Townhome – When you purchase a townhome you are buying the land and the structure erected on the land. Townhomes often have shared walls, shared spaces, and HOA’s. If you’re okay with not having your own outdoor space and following some general rules this can be a great option. Most of the time HOA’s maintain the exterior of the property. You do pay monthly dues but you don’t have to worry about mowing the lawn, shoveling, or replacing the roof. All HOA’s have different rules and regulations.
Condominium – When you purchase a condominium you are buying the structure only and no land. A good reference point is you own the “walls-in”. You do not own the exterior of the property, the land this is built on, or any shared common space. You have the same HOA’s as townhomes do but sometimes more rules and benefits. Typically condominiums are similar buildings to an apartment building. You may have access to a fitness center, pool, lobby, parking garage, and more. The biggest difference is you own your unit instead of renting.
Multi-Unit – When you purchase a multi-unit you are buying the structure and the land it is built on. Multi-unit properties have two to four addresses but never more than four. Once you exceed four units it is considered a commercial property which would change your financing and ownership options. Often times people invest in multi-unit properties since they are “mini-apartment buildings”. You have access to rent out two to four units or even live in one and rents out the others to help pay for the mortgage.
Co-Operative – These are rare. Often times this purchase option is located in a large city; New York, Chicago, L.A., etc. These are large apartment buildings that owners purchase a share in the corporation that owns the building along with the unit. When you own a share of the building you have a right to vote for board members and make decisions about what happens to the building.
Land – People buy land often times to build or construct their dream home on the lot. You are only buying land as there are no structures erected yet. When buying land it is important to do research about what you can build on the property prior to closing. You want to have a soil test, see if utilities can be connected, check zoning ordinances, and more.
Commercial
Commercial real estate can be defined as a property that is used for a business purpose rather than a living space.
Multi-Family 5+ – This references any building that has five or more apartments. No businesses are run out of this building as the sole purpose is for apartment units and renting them out.
Office, Business, Retail – This refers to a property thats purpose is to serve as a space for operating businesses. Whether it is a restaurant, doctors office, or clothing store these buildings do not have space for people to live in. It can be a stand alone structure with one business or it can be a large building with many floors, units, or different businesses conducting. Some businesses own the building they operate in while many rent.
Mixed Use – This is a mixed property that conducts for both business and personal living. These buildings will often times have space for a business to operate on street level with apartment units located above the business. These can be large buildings with 50+ units both business and personal living or it can be as small as two units with one of each.
Industrial/Manufacturing – This is a property designated for large industrial use. Typically it is less than 20% office space with the remainder used for warehouse storage, manufacturing, shipping, loading docks, etc.
Land – This is only land with the purpose of developing commercial property on it. Just like purchasing residential land you have a lot to process and check prior to closing. When purchasing land for commercial development you have many more boxes to check prior to closing.
