Real estate is a complex industry with many facets. It can range from raw land to

buildings that house a corporation’s offices. It can also include homes and

apartments that generate income through rent payments. Real estate professionals

like real estate agents, brokers and developers make money by buying, selling or

facilitating the exchange of property. There are six primary areas of real estate that

make up the overall industry:

Residential real estate includes structures that people live in for their daily lives,

such as single-family homes, condominiums and multifamily rental properties with

five or more units. This category also includes new construction and resale homes as

well as vacation rentals. Multifamily housing is the fastest growing segment of

residential real estate, driven by the retirement of baby boomers and smaller family


Commercial real estate (CRE) primarily includes places of business such as office

buildings, strip malls and warehouses. CRE is often considered more stable than

other investments because businesses use their properties to generate revenue,

which reduces the risk of a loss in value compared to other assets. However, CRE is

also susceptible to economic cycles as demand for commercial space decreases

during slow periods. Also read

Industrial real estate includes manufacturing buildings and warehouses used for

research, production, distribution and storage of goods. The most common uses of

industrial real estate are distribution centers, light manufacturing and logistics

facilities. Industrial real estate is less cyclical than other asset classes, but it can be

vulnerable to economic factors such as global trade, foreign investment and interest



The underlying assets of real estate are the land and any improvements made to it.

The value of real estate can increase through development, such as a building being

constructed on vacant land or through appreciation, which occurs when the market

values a specific type of property higher than its original purchase price.

As a large, liquid asset class, real estate is often used as an alternative or addition to

traditional stocks and bonds. In the long term, its returns can be attractive

compared to other investments, but it is important to understand the risks

associated with investing in this sector.


Managing real estate requires knowledge of local markets, the ability to assess the

financial feasibility of potential projects and the negotiation skills needed to close

deals. Successful investors understand that their efforts must be focused on the

highest return opportunities with the lowest risk. For example, they may focus on

rehabbing existing properties to improve their value, or they may opt for wholesaling

as a way to learn the industry before purchasing their first property. Whatever

strategy an investor chooses, they must also be willing to put in the time and effort

necessary to grow their business. For this reason, many new real estate

entrepreneurs seek out a mentor or coach to help them get started and avoid costly

mistakes. The most effective mentors are those who have already achieved success

in the industry and can offer guidance based on their own experiences.