The definition of real estate is the transactional sale or acquisition of real property, which not only includes the land itself but everything permanently attached to the land. This includes natural resources and improvements on the land like houses. Furthermore, improvements on the property can include new or old structures, as long as the property is based on a piece of land. 

Real estate can be used for a number of purposes, from providing people with a place to live, to using raw land to farm, to renting a commercial property for a business. Real estate industry professionals like real estate agents, brokers, or developers make money by building or facilitating the exchange of property. 

There are many different branches and facets of real estate contributing to the purchase, sale, and ownership of property. Here is an overview of how a few of the various elements of real estate work together. 

- __New property construction__: Although existing real estate is plentiful, there is always a demand for new property. Real estate development companies will often manage the construction of new builds like homes and commercial properties. Contractors will build the properties and once they’ve been completed, they are ready for valuation and for sale or leasing. The developer or builder will be paid for their services. 
- __Buying and selling residential property__: The housing market accounts for a large chunk of the real estate market. Many people choose to work with residential real estate agents, real estate brokers, or [realtors](https://www.masterclass.com/articles/what-is-a-realtor-explained) who facilitate the purchase and sale of a home because the intricacies of the process are difficult to navigate. Residential real estate works off of supply and demand for particular houses in certain areas. Each house has a different valuation depending on its square footage, added amenities, location, and comparable properties. During a residential real estate transaction, the buyer and seller and their respective agents will collaborate on the financial and legal work involved in transferring ownership of a property from one party to another. This process involves making an offer, mortgage lender approvals, home appraisals, inspections, closing on the home, and transferring the title of the property from one pair of hands to another with the signing of a deed. 
- __Property investment__: Investment properties can include house flipping projects or rental units where the building owner collects income and hires a property manager to manage the building. Real estate investment trusts (or REITs) are companies that own and operate real estate, and if they are publicly traded civilians can invest in them for passive income. Different types of real estate investments will yield different profits depending on your location, property type, and purpose. Real estate developers are property investors, but they are also involved in building new property rather than investing in existing builds. 
Here is an overview of five of the most common types of real estate. 

1. __Residential__: Residential real estate refers to a piece of real property that is used exclusively for private, residential living. Residential property includes structures like single-family homes, [condominiums](https://www.masterclass.com/articles/buying-a-condo-explained), townhouses, and multifamily rental properties with four or fewer housing units. 
2. __Commercial__: Commercial real estate (or CRE) is any property that is used exclusively for business or workplace purposes or to generate cash flow in some way for the owner or lessee. Commercial properties include retail spaces, office buildings, strip malls, gas stations, shopping centers, and apartment buildings containing five or more units. 
3. __Raw land__: Raw land refers to vacant land, farmland, or other undeveloped property. This land is largely untouched with little to no improvements or cultivation. It is less expensive than developed land and is often more flexible in terms of use. 
4. __Industrial__: Industrial real estate deals with property that is used for manufacturing, production, and storage like power plants or factories. The main difference between industrial and [commercial real estate](https://www.masterclass.com/articles/what-is-commercial-real-estate) is that industrial real estate involves land transactions for the production of goods, while CRE involves transactions for the distribution or sale of those goods. 
5. __Special purpose__: Special use real estate involves real estate transactions for public areas like parks, libraries, schools, and cemeteries. These areas have specific, limited use, but may also fall under the umbrella of commercial property. 

All you need is a [MasterClass Annual Membership](https://www.masterclass.com) and our exclusive video lessons from prolific entrepreneur Robert Reffkin, the founder and CEO of the real estate technology company Compass. With Robert’s help, you’ll learn all about the intricacies of buying a home, from securing a mortgage to hiring an agent to tips for putting your own place on the market. 
There are many different kinds of real estate used for a number of different purposes. 


There are many different kinds of real estate used for a number of different purposes. 


What Is Real Estate? A Guide to the 5 Types of Real Estate

The definition of real estate is the transactional sale or acquisition of real property, which not only includes the land itself but everything permanently attached to the land. This includes natural resources and improvements on the land like houses. Furthermore, improvements on the property can include new or old structures, as long as the property is based on a piece of land. Real estate can be used for a number of purposes, from providing people with a place to live, to using raw land to farm, to renting a commercial property for a business. Real estate industry professionals like real estate agents, brokers, or developers make money by building or facilitating the exchange of property.

What Is Real Estate?

There are many different branches and facets of real estate contributing to the purchase, sale, and ownership of property. Here is an overview of how a few of the various elements of real estate work together. <ul class="mc-m-4 list-styled"><li class="">New property construction: Although existing real estate is plentiful, there is always a demand for new property. Real estate development companies will often manage the construction of new builds like homes and commercial properties. Contractors will build the properties and once they’ve been completed, they are ready for valuation and for sale or leasing. The developer or builder will be paid for their services. </li><li class="">Buying and selling residential property: The housing market accounts for a large chunk of the real estate market. Many people choose to work with residential real estate agents, real estate brokers, or <a href='https://www.masterclass.com/articles/what-is-a-realtor-explained' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/what-is-a-realtor-explained","linkCopy":"realtors","category":null}'>realtors</a> who facilitate the purchase and sale of a home because the intricacies of the process are difficult to navigate. Residential real estate works off of supply and demand for particular houses in certain areas. Each house has a different valuation depending on its square footage, added amenities, location, and comparable properties. During a residential real estate transaction, the buyer and seller and their respective agents will collaborate on the financial and legal work involved in transferring ownership of a property from one party to another. This process involves making an offer, mortgage lender approvals, home appraisals, inspections, closing on the home, and transferring the title of the property from one pair of hands to another with the signing of a deed. </li><li class="">Property investment: Investment properties can include house flipping projects or rental units where the building owner collects income and hires a property manager to manage the building. Real estate investment trusts (or REITs) are companies that own and operate real estate, and if they are publicly traded civilians can invest in them for passive income. Different types of real estate investments will yield different profits depending on your location, property type, and purpose. Real estate developers are property investors, but they are also involved in building new property rather than investing in existing builds. </li></ul>

How Does Real Estate Work?

Here is an overview of five of the most common types of real estate. <ol class="mc-m-4"><li class="mc-my-4"> 1. Residential: Residential real estate refers to a piece of real property that is used exclusively for private, residential living. Residential property includes structures like single-family homes, <a href='https://www.masterclass.com/articles/buying-a-condo-explained' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/buying-a-condo-explained","linkCopy":"condominiums","category":null}'>condominiums</a>, townhouses, and multifamily rental properties with four or fewer housing units. </li><li class="mc-my-4"> 2. Commercial: Commercial real estate (or CRE) is any property that is used exclusively for business or workplace purposes or to generate cash flow in some way for the owner or lessee. Commercial properties include retail spaces, office buildings, strip malls, gas stations, shopping centers, and apartment buildings containing five or more units. </li><li class="mc-my-4"> 3. Raw land: Raw land refers to vacant land, farmland, or other undeveloped property. This land is largely untouched with little to no improvements or cultivation. It is less expensive than developed land and is often more flexible in terms of use. </li><li class="mc-my-4"> 4. Industrial: Industrial real estate deals with property that is used for manufacturing, production, and storage like power plants or factories. The main difference between industrial and <a href='https://www.masterclass.com/articles/what-is-commercial-real-estate' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/what-is-commercial-real-estate","linkCopy":"commercial real estate","category":null}'>commercial real estate</a> is that industrial real estate involves land transactions for the production of goods, while CRE involves transactions for the distribution or sale of those goods. </li><li class="mc-my-4"> 5. Special purpose: Special use real estate involves real estate transactions for public areas like parks, libraries, schools, and cemeteries. These areas have specific, limited use, but may also fall under the umbrella of commercial property. </li></ol>

5 Types of Real Estate

All you need is a <a href='https://www.masterclass.com' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com","linkCopy":"MasterClass Annual Membership","category":null}'>MasterClass Annual Membership</a> and our exclusive video lessons from prolific entrepreneur Robert Reffkin, the founder and CEO of the real estate technology company Compass. With Robert’s help, you’ll learn all about the intricacies of buying a home, from securing a mortgage to hiring an agent to tips for putting your own place on the market.

Ready to Learn the Ins and Outs of the American Housing Market? 

There are many different kinds of real estate used for a number of different purposes.