Residential Real Estate
What is Residential Real Estate?
Residential real estate is property that has been specifically zoned to designate areas where people can live. The purpose of zoning is to divide land into residential, commercial and industrial sections. Popular zoning restrictions include:
- Types of buildings allowed
- Utility line locations
- Property line boundaries
- Building heights and sizes
- Maximum number of rooms
Residential real estate is intended for personal use, and zoning laws can regulate the different types of homes and number of homes allowed based on the size of a given lot. In addition, other restrictions such as noise limits, how many pets are allowed per household, or whether you can operate a business from your home fall under residential zoning rules and regulations.
Residential Real Estate Example
Residential real estate can also be defined as property that is available for occupation for a non-business-related purpose. Examples of residential real estate can include:
- Condominiums: private units owned within buildings or communities, similar in structure to apartment buildings.
- Cooperatives: a building or community where people occupying the individual units collectively own the property together.
- Multi-family houses: a house-like building that has multiple units, i.e. a duplex or four plex. A multifamily home with more than four units falls under the category of commercial property.
- Townhomes: units that share a wall or two with another building. Townhome units are usually larger than condo units.
- Single-family homes: free standing dwelling typically built on a single lot.
Residential real estate is for personal living use and is primarily designated to meet the wants and needs of a homeowner and his/her family. For this reason, residential real estate purchases are so closely tied to emotion. If a home “feels right” to a buyer this often indicates more than enough reason to buy. Mainly intended for individual use, locations such as hotels, assisted living centers, and other temporary living properties do not fall under the umbrella of residential real estate.
Different standards are applied to different types of real estate. Take for instance comparing residential to commercial real estate. A typical residential property’s mortgage cannot exceed 45% of a buyer’s gross income. When compared to commercial property, a 20% down payment is required at the time of purchase. Similarly, the terms of a residential loan are usually between 30-50 years which is considered longer when compared to commercial loans that fall in the 10 year range. It is important to understand the rules and regulations for the type of real estate you are looking to invest in. Learn more with Cityvest.