If you're looking to become a real estate investor or just looking for the exact details of selling your home, it helps to know about the different types of real estate. There are five basic types to consider: residential, commercial, industrial, agricultural and specialty.
Private property
Residential real estate is what most buyers or sellers deal with. Residential property includes property that serves as a dwelling or home. It does not matter whether it is a house, apartment building or maisonette. All are considered residential. These can either be in the city itself, a more suburban area or in rural areas. It should be noted that while the title may zone the building a certain way, the lender may view it differently. For example, multi-family houses of a certain size or apartment complexes are considered commercial and as such would not be eligible for home loans.
Commercial
Even if a home buyer is not involved in commercial real estate, everyone knows commercial real estate. A commercial property is one where a business or trade is carried on. Examples could be car parks, shopping centres, shops and stores, hotels, entertainment venues or any form of market. Commercial real estate has a different set of criteria for prospective buyers as they deal with business zoning, parking, tax rates and traffic flows become much more important than just the building itself. Businesses and investors are often considering commercial real estate and would have knowledge or ideas on how to increase the value of existing properties. Some home buying companies will convert the homes into commercial properties for this purpose.
Industrial
This property can easily be mistaken for a commercial property, especially since it usually has a commercial use. In fact, if the industrial zoning codes are followed, a commercial property can be established in an industrial area. However, industrial property itself is segregated to include factories, warehouses, power plants and other high utility buildings that are not necessarily busy. The primary difference is that commercial real estate is where goods are sold, while industrial real estate is where goods are manufactured or delivered.
Agricultural
Agricultural property is fairly simple to label and conceptually understand. This is land that is primarily used for agriculture. Most people only think of farms, but farms are also included as agricultural. More abstract agricultural uses are orchards, certain types of bogs, or forests grown for forests. Specific knowledge is definitely a must for this type of soil, as not all crops, products or livestock can be grown in all areas. Even if something has been grown there in the past, the knowledge of nutrient depletion must also be considered.
Special purpose
Special purpose properties are not beyond the purview of real estate investors, but most people don't deal with them. Part of the definition of a special purpose property is that it is a property that is suitable for a single or limited use. It has less to do with the land than with the building on it, in terms of a building that cannot be converted to another use without a large capital investment. As such, they usually have a very limited market of potential buyers and are not optimal for selling a property quickly.
Hopefully this overview has helped illustrate the differences between the main different types of property. The information needed to make an informed buying decision varies greatly depending on the type of property being viewed. Make sure any agent you use is knowledgeable about the type of property you are considering and any zoning laws that may apply
