Land ownership can be the genesis of many endeavors. People purchase land for many different purposes. The purpose to which a piece of real estate can be put depends on factors such as what is already there and what the local government says it can be used for through zoning. There are four different types, sometimes called sectors, of real estate.
- Land
This sector includes land that is put to agricultural uses (e.g., farms and ranches), land that has been zoned but as yet remains undeveloped, as well as vacant land. Sometimes vacant land is set aside and preserved as parks for public or private use.
- Industrial
Industrial real estate is land where goods are manufactured, researched, or stored. Examples of industrial real estate include warehouses and factories. When it comes to areas where the manufactured goods are distributed, there is some overlap between industrial and commercial real estate.
- Commercial
Commercial real estate is land that is used to make profit by offering goods and services for sale. Typically, goods are manufactured elsewhere and then transported to the commercial property where they are sold. If the primary purpose of the property is to make money for its owners, then it is considered commercial real estate. Therefore, an apartment complex is considered commercial real estate because, even though people live there, the owner makes money by collecting rent.
- Residential
Residential real estate is used for non-professional purposes, specifically for people to live. A single-family home sitting on its own plot of land is one of the most basic kinds of residential real estate, whether it has existed for some time and is now available for resale or it is a new construction awaiting its first occupants. However, there are also more complex kinds of commercial real estate. For example, condominiums and co-ops are considered residential rather than commercial real estate. This is because there is not one single owner making money from collecting rent but an organization of owners with equal standing, and no one is generally making a profit off the property.