what is real estate?

Real Estate simply means land and any permanent structure or resources attached to it.

The structures can be on the surface e.g. trees or underneath such as mineral resources.

If you own a land, any structure or natural resources attached to the land is yours. Interesting right?

Types of Real Estate

Real estate can be classified but not limited to the following:

• Residential,
• Commercial and
• Industrial Real Estate.

Residential Real Estate

From the name residential, you would already know it is about, ‘’homes’’.

Homes are building structures meant to provide shelter and comfort, or it can be defined as a building one can live in.

This type of real estate is concerned with providing shelter and comfort for the growing population.

It can be a single-family home, duplex or town houses (houses built in groups each house sharing one or both walls with their neighbour).

Commercial Real Estate

These are building structures for business purposes. It includes restaurants, hotels, gas stations, offices.

Industrial Real Estate

They are building structures where goods are produced/manufactured and distributed.

They include manufacturing companies, factories, and requires a large area of land for operations.

Factors Affecting Real Estate

Certain factors can add to, or reduce the value of land property which includes the following:

Location

Location of a land has a huge influence on its value. If a property is situated at an inhabitable area, due to insecurity or an area prone to natural disaster e.g. flood, the value of the land tends to depreciate.

Development

The value of a land is increased if it is situated at a growing/developed area.

An area is developed if has electricity, accessible road, security and availability of certain structures such as schools, markets etc.

These basic amenities helps to make an area habitable and good for business.

Importance of Investing in Real Estate

Real estate investment has many benefits if the property is located in an urban or developing area.

1. Source of Steady Income.

It can serve as a source of monthly or yearly cash flow (passive income) by lent of property or land, especially if it is located in an area with schools, market, security and electricity, the property is valued high.

2. Appreciation

Real estate is a life time investment. The value of land/property increases about 3% yearly if it is located in an urban area.

Also, increase in population equals increase in value of property, due to demand of houses as homes or as offices.

This is an investment that can be passed down to generations.

3. Tax Benefits

Real estate investors, pay less tax compared to other entrepreneurs.

This is because, As an investor, also called a developer, you provide houses and offices for the growing population and also help to develop an area.

4. Self-Employment

Investing in real estate means you are your own boss. You make rules concerning the property, you can decide to lent or sell the property, increase the lent of the property etc. though, all the effects of your decision lie on you, good or bad.  

There you have it!!