The term real comes from the Latin language, meaning any physical and real property. The Latin word “rex” means Royal since kings used to own all property back in the days. While real estate is one of the oldest and most popular modes of investment, many people don’t know the different types of real estate and how financing in each category differs from the other. In this article, we are going to take a brief look at each type for better understanding.
There are four main types of real estate investments. These are:
Includes both previously constructed homes that are up for sale again and newly built constructions. In residential homes, the most common category is single-family homes – can be a single room or multiple. Such as Giga Group’s latest Goldcrest Highlife project. Moreover, residential real estate also includes guest houses, condominiums, and high-value homes, co-opts, and vacation homes. The length of a user’s stay depends on the kind of agreement between two parties.
Commercial real estate includes shopping malls, office buildings, skyscrapers, and retail centers, educational, and medical buildings. Apartment buildings, Hostels, and motels are also often considered as commercial real estate even though they are used for residential purposes. The reason being, these buildings are owned to generate a passive income for the owner. Commercial buildings can be leased out to small business owners and companies who like to rent out the property for a particular period. Sometimes the commercial leases are for multiple years. This leads to higher cash flow safety even at times when the rental property prices are going down. However, if commercial rates go up, in that scenario, the lease agreement cannot be revised. Thus incurring damages.
The third type of real estate is industrial real estate. It includes manufacturing buildings, warehouses, and large scale product stores. These buildings are often used for the production, storage, research, and long-distance distribution of manufactured goods. It should also be noted that some buildings that distribute manufactured goods are classified as commercial buildings. The classification is significant because the construction, zoning, and sales are handled in different ways for both types. Industrial real estate leases are, for the most extended terms, some extending to as much as 99 years in Pakistan.
The fourth type is Land. It includes working farms, property ranches, and vacant land. There are various subcategories under vacant land that include underdeveloped, reuse, or early for development, site assembly, and subdivision.
These properties combine multiple aspects of the above-mentioned categories into one. In the words of Mr. Najeeb Pardesi, the Vice Chairman of the Giga Group, “mixed real estate properties offer the most returns because of their versatility.” Though considered a bit risky, mixed-use real estate properties are suitable for those who have Signiant assets beforehand to reduce the risks associated with such an investment.
We hope now you understand the different types of real estate investments and in a much better place to choose one that suits you most. Thank you for reading.