Real Estate Investing - How To Invest In Residential Real Estate


Real estate comprises all real property owned by a person or his legal authority, other than personal possessions. Real estate includes immovable real property like buildings, mines, properties and the fittings in it, and its accompanying natural resources like water, minerals or vegetation; immovable personal property of that kind, including houses, buildings, etc. An estate includes immovable personal property, personal real estate and any interest in such property. The term'real estate' does not include the leasehold property (land) or the landed property.


Under the law of succession, real estate includes all real properties which a deceased person has transferred to his/her spouse, any minor children, relatives or any dependents. Generally, real estate is referred to as such, because the personal property connected to it is not necessarily connected to the immovable property. For instance, when a person buys a house, the land on which the house is built is called'real estate'. However, if the house becomes a liability, and if the land on which it stands becomes immovable, the property transferred is termed 'personal property'. Hence, it is clear that real estate cannot be transferred permanently


Real estate is divided into two categories: resale value and equity. Resale value indicates the increase in the market value of a real estate over the time period it was owned. Equity on the other hand, refers to the actual worth of the land, building or structure. This is calculated by taking into account the depreciation factor. The economic characteristics of single-family residential real estate are quite different from the other types.



Unlike the residential type, real estate does not enjoy any special tax benefits. This is due to the fact that real estate involves a lot of risk, which makes it less attractive for investors. Also, there are many restrictions and laws on transferring real estate, and the only way through which you can become successful in this business is by investing in residential properties. There are four main types of single-family homes.


The first and the most popular amongst the four types of single-family homes, is the duplex. A duplex is a kind of housing unit that has two units. This means that one of the units has been converted into a residential unit, while the other unit is exclusively for leasehold purposes. The property being traded in here is referred to as a 'family home'.


The other three main categories of real estate investment are the single-family houses, condominiums and the modular homes. A condominium is like a housing unit that possesses certain common features, like an attached garage, common areas, swimming pools and a swimming pool table. A residential unit that possesses these features can be classified as a residential condominium. However, the term'residential property' is often used here, because the common elements among these three types of structures include the possession of land. The condominium and the apartment are actually the same type of real estate product.


The third category, the modular homes, are manufactured homes that have different functional aspects. These include living areas, dining spaces and bedrooms. Many real estate investors buy these residential houses and convert them into apartments. They can also be bought and resold, depending on the current market trends.

Finally, we come across the last type, the real estate investment trust (reit). This is one of the most popular ways of investing in residential real estate. It has the potential of earning maximum profits through its renting facilities. This happens when the investor buys a house at a lower price than the prevailing market rate and then re-lists it for a higher price. Usually, this is done after deducting the cost of repairs and maintenance. However, the income generated from rental facilities can compensate for the higher cost, thereby ensuring maximum profits.