What is Real Estate?
Real estate is property comprised of land and the buildings on it, as well as the natural resources of the land, including farmed crops and livestock, water and mineral deposits. Although media often refers to the “real estate market,” from the perspective of residential living, real estate can be grouped into three broad categories based on its use: residential, commercial and industrial. Examples of residential real estate include undeveloped land, houses, condominiums and town houses; examples of commercial real estate are office buildings, warehouses and retail store buildings; and examples of industrial real estate include factories, mines and farms.
Real estate is only a piece of land plus any natural or artificial (man-made improvements) that are attached or have been added; while real property, a broader term, includes land, buildings and other improvements plus the rights of use and enjoyment of that land and all its improvements. This right consists of the rights for property owners to use their property as they see fit. In this way, real property consists of both physical objects and common law rights while real estate only consists of physical objects.
Renters and leaseholders may have rights to inhabit land or buildings that are considered a part of their personal estate, but are not considered real estate.
Personal Property vs Real Property
The distinction between the major categorization of property comes ‘personal property’ and ‘real property’ comes from English common law, but our modern laws continue to distinguish between the two.
Real property is land, anything attached to it and any rights that are appurtenant. Personal property includes intangible assets like stocks, bonds and other investments; it also includes tangible property, like computers, furniture and clothes, as well as fixtures like a dishwasher, even if you are renting a home (provided you bought and installed it with the lessor’s permission).
Some “untouchable” items may be represented by a certificate or license.
If you were building a house and received a delivery of the sinks, toilets, bathtubs and heating and air conditioning equipment, all those boxes and crates stored in the unfinished dwelling would be personal property. Once it was all installed it would become part of the real property.
Therefore the personal property would have been converted to real property. If you sold the home after it was completed that property could not be removed since it would be legally considered part of the real property.
Turning personal property to real property is therefore the best investment.