What’s the Difference between Residential and Commercial Real Estate?

Real estate is simply a property of land, a building, or land and the building on it, including the other resources in it. It has four major types. The two most common types are residential and commercial real estate.

Residential real estate is a property type that includes newly-constructed and renovated homes. These are properties that are either built or rented for residential purposes. This may differ in types in accordance with the neighborhood they belong to and the entity owning the property. Apartments and condominiums are considered residential real estate. They are both individual units in a certain building. The difference between them is that a condominium has facilities that are co-shared with other condo-unit owners, like pools, fitness centers, concierges, and more. Single-family and multi-family houses also belong in this list. Mobile homes, as well, are considered residential real estate even if they are movable on wheels. These, and a lot more, are residential real estate properties because they are acquired for non-business purposes.

On the other hand, commercial real estate (also known as investment or income properties) refers to properties intended to produce a profit. These may be structures or land properties that are either bought or rented for that said purpose. These include office buildings, industrial structures (more known as commercial buildings), warehouses, healthcare units, and a bunch more. Any type of structure that generates income is commercial real estate, even restaurants, hotels, resorts and malls. Even multi-family residences (apartments) can be considered commercial because of their profit-generating status. They do differ in various places and tax obligations.

Commercial properties are known to be more pricey compared to residential properties. Not always but most of the time, they are more expensive because they generate income. And, anything that produces a profit is eyed by a lot of possible buyers or renters. The higher the demand, the more reasons to increase in value.