The simple classification of real estate assets

[vc_row][vc_column][vc_column_text]Are you thinking about the classification of your property or one that you know? Do not worry that you are not the only one with this question and by reading this article you will have a clearer idea of it.

Since Roman times there has been a concern to classify real estate. As in each area of knowledge, different methodologies have been developed for its classification. In this chapter we will expose those that we consider useful for legal and investment purposes.

The Real Estate Cadastre Law

In Spain, according to Real Estate Cadastre Law, real estate is classified as urban, rustic, or with special characteristics. EThe Cadastre is an administrative registry placed at the service of public administrations and citizens. Its classification of real estate is due to a tax purpose of the State. It is important to point out that the Property Registry is the only one that has effects of public faith regarding ownership and real rights over real estate.

In Spain and in many countries this classification is still valid. The urban or rustic character of the property will depend on the nature of its soil. Thus, an urban property will be determined by urban planning, it will be used for the development of housing, businesses or industries. While a rustic property will have as its objective the agricultural exploitation of the land or as a reserve and natural refuge. Properties with special characteristics are closely linked to their function, such as power plants, dams, waterfalls, highways and airports.

The Cadastre classification is incomplete for real estate investment analysis. For this we must take into account 3 other distinctions: use, location and construction quality, all of them linked to the value of the property.

Urban propertiesa

According to their use, urban properties can be classified into the following types:

• Homes (residential).
• Offices.
• Locals or ships.
• Land or solar.

According to their location, it is useful to classify them into the following classes::

• Class A: properties located in premium areas.
• Class B: properties located around the premium areas.
• Class C: properties located in the rest of the zones.

The quality of the construction is linked to its cost of execution, and thus we propose to classify the properties in:

• Substandard or plain quality.
• Usual or normal quality.
• Quality better than normal or good.
• Exceptional or luxury quality.

As a summary, we have prepared the following Table:

Thus, a house can be located in a premium area and be built in good quality.

From the point of view of real estate investment, it is important to know that the behavior of real estate assets is very heterogeneous. At the same time and in the same market, there are types and classes of real estate that are opportunities and others that are no longer. For the investor it is very important to identify them. For this, it is very useful to have the information and analysis provided by professionals in the sector.

We would appreciate it if you would leave us a comment on this article. What types or classes of real estate do you use in your real estate investment? Your opinion interests us.

Thanks

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