Residential Real Estate
In simple terms, residential real estate is any kind of property for which 80 percent or more of its revenue comes from dwelling units. That means even property which is used for both residential and commercial purposes can qualify as residential as long as it satisfies the 80 percent requirement mentioned above. The income from residential real estate is passive, meaning the earner derives the income without any active involvement on his/her part. Examples of residential real estate are apartments, single family homes, multi-family structures, co-ops and condominiums.
Some of the different divisions of residential real property are described below using commonly accepted definitions:
- Apartments – These are individual (single-level) units constructed one over the other in any multi-unit building. Apartment flats are of diverse design and size and can even have more than three bedroom floorplans.
- Single-family homes – These may be defined as freestanding, individual, unattached dwelling units, usually constructed on a lot larger than the building itself and thereby making way for an area around the house called a “yard.”
- Multi-family homes: Each floor of a multi-family house is a separate unit or apartment. A duplex multi-family home has two units, a triplex has three units and a quadraplex has four units per building. The units in duplexes and triplexes are usually constructed side-by-side in a row while those in a quadraplex are typically built back-to-back.
- Co-ops – Also known as housing co-operatives, co-ops form a kind of multiple ownership whereby the occupants of a multi-unit housing complex are shareholders in the co-operative cooperation that possesses the land. To put it in easier terms, each occupant does not own any part of the property but instead owns a share of the legal body that owns the real estate. In owning a share, the shareholder gets the right to occupy a particular unit or apartment in the residential property.
- Condominiums – These are single buildings or a complex of them , having a number of apartments with individual ownership. Common areas or common grounds within the
building/ complex are jointly owned and shared.
A city or locality may zone certain areas for residential real estate just as they zone other areas for commercial, industrial, agricultural, retail, open space or mixed-use applications. Zoning is the allocation of specific types of structures in the area concerned.