Chapter 1: The Nature of Real Estate and Real Estate Markets
Real Estate: Some Basic Definitions
– anything that can be owned, or possessed. Can be a tangible asset or an intangible asset.
Tangible assets – physical things, such as automobiles, clothing, land, or buildings.
Intangible assets – nonphysical things including contractual rights (ex: mortgage and lease
agreements), financial claims (ex: stocks and bonds), interests, patents, or trademarks
The term “Real Estate” used in three ways:
Real Estate as a Tangible Asset
– the land and its permanent improvements.
Improvements ON the land: include any fixed structures such as buildings, fences, walls, and
Improvements TO the land: include the components necessary to make the land suitable for
building construction or other uses or infrastructure.
Infrastructure – consists of roads, streets, walkways and driveways, storm water drainage
systems, water, sewer, electric, and telephone utilities, excavation and fill, etc.
Land – more than simply the earth; also includes improvements (ex: buildings +
- see ↑)
“Raw” land – a larger area that does not include any improvements.
Personal property – things that are movable and not permanently affixed to the land (ex:
Real Estate as a Bundle of Rights
- intangible rights associated with ownership and use,
including services or benefits that real estate provides its users (ex: rights to shelter, security, and
privacy as well as a location that facilitates business or residential activities)
This bundle of rights includes exclusive possession of the real property, use or enjoyment,
disposition (disposal), and use as rental property to generate cash flow.
The Bundle of rights can be limited