Dear Ney Ney,
This is the first in the series of posts discussing how to invest in real estate. In these notes I will explain what real estate is, why you might want to invest in it, and how to go invest in it if you decide that you want to do it. Investing in real estate is a great way to build wealth and pass that wealth on to your own children one day.
What is real estate?
Real estate Is land and the buildings and houses built on it. Real estate includes houses, apartment buildings, land, storage facilities, shopping centers, and office buildings.
Real estate is divided into two groups, or types, residential real estate and commercial real estate. Residential real estate includes houses, apartment buildings with four or fewer apartments, and condominiums. Commercial real estate includes office buildings, shopping centers, storage facilities, warehouses, and apartment buildings with five or more apartments. Land can be residential or commercial depending upon the use or intended use of the land.
When talking about real estate, houses include normal houses that have four walls in the yard or townhomes or row homes that share walls between them. Condominiums are individual apartments in buildings which are owned by people. Small multi family buildings are apartment buildings with between two and four apartments. You can live in one and rent the others out. These are also called triplexes for three unit buildings for blacks is for four unit buildings and duplexes for two unit buildings.
Office buildings can mean large buildings, even sky scrapers like in New York, or smaller buildings that might be found in the downtown area of any town. Some offices might serve a special use, such as office space for doctors who use them to treat patients.
Shopping centers include shopping malls, small shopping plazas, and even standalone buildings for stores and restaurants.
Storage facilities are places that have rooms used by people to store their items, like furniture, when they don’t have any space in their homes.
Warehouses are places where companies store products before they are moved to stores or shipped to customers. A great example of warehouses today are Amazon Fulfillment Centers.
Apartment buildings with five or more apartments are considered commercial, not residential, properties. This is because they are looked at as something bought as a business, as opposed to something bought by someone to live in.
Land can be land that you buy to build a house on, build many houses on, farm, or even use as a source of wood, or timber. Most land that is purchased is commercial, but some people do buy land to build their house on. Often this land is in communities near a lake or resort, and the land for a house is called a “lot.”
There are advantages and disadvantages to both residential and commercial real estate, which I will talk about in another note. For now it is good to know that there are many types of real estate to invest in so you can always find something that is interesting to you and a good investment.
I love you.
Dad
