Real estate assets are generally classified as residential, commercial, and industrial.
Residential real estate can take the form of single-detached units, terraces (also called row houses or linked houses), apartment complexes, condominiums, or structures meant as homes and dwelling places. It also refers to the land on which residential structures are built, or will be built in the future.
Commercial real estate can also take the same form of residential properties, although these are meant to conduct business in: offices, restaurants, retail outlets, malls, recreational facilities, leisure areas, medical clinics, hospitals, self-storage buildings, and paid-parking lots. It also refers to the land on which commercial structures are built, or will be built in the future.
Industrial real estate is a subset of the commercial-property space, and usually connotes warehouses, distribution centers, factories, or oil refineries. It also refers to the land on which industrial structures are built, or will be built in the future, agricultural land, mining sites, among others.
In real estate crowdfunding, investor-familiarity with these property classes helps in coming up with sound decisions. Investors need to know how project operators propose to sell or lease their respective properties quickly and, correspondingly, when the returns on investment will be distributed.
For example, a real estate crowdfunding site presents an opportunity to back the development of a residential apartment complex near a proposed industrial park. The series of self-questions can begin with, “Will prospective buyers appreciate the fact that the industrial-park operations are inclined to pollute the air?” It should also progress to, “Will the project operator really be able to sell the units within a few months, as claimed, even if the industrial park is scheduled for groundbreaking five years from now?”
Although veritable online platforms like the HBR portal presents full disclosure on the project operators’ disposition plans, as well as the prevailing and predicted market conditions, investors must know for themselves how each property class can be directly impacted by internal and external factors. It always pays to learn investment processes, and to exercise due diligence before making any decisions.