So, when it comes to real estate and other things of a technical or legal nature there is a limit to how far you can break it down and still stay true to their meaning.

However, I said I would explain real estate in simple terms.

So, I’m going to do my best to stay true to my word.

All while trying not to water down the information at the same time.

So, What Is Real Estate In Simple Words?

Now, in the simplest terms that I can think of, real estate is property (land) and anything on it that is a permanent fixture. This can either be man-made or natural. Such as structures, fences, and even agua (water) & minerals. Other examples of real estate are commercial offices, houses, & apartment buildings. Also, if you know what you’re doing, real estate can be a good investment vehicle to provide you with long-term financial security. Now, it can be hard to learn the terminology used in real estate. This field practically has its own language and contains acronyms and industry-specific terms. So, below are 5 relevant real estate terms and some pretty simple explanations to go along with them.   

Property

The concept of Property dates back to what most people would consider ancient times.

It has a rich history, with philosophers like Aristotle, Locke, Hegel, and others pontificating on the subject.

Needless to say, they had varying beliefs when it came to property.

Now to paraphrase, the legal definition of property is money and other tangible (basically physical) things, including raw or developed land, and also any intangible rights, such as patents, copyrights, & trademarks, all of which have value and/or produce wealth or income.  

Furthermore, it includes the property rights that a person has over natural resources such as soil, minerals, and water too.

So, the definition of Property also includes the right of an owner to enjoy, use, and dispose of their Property.

This right is called a right of ownership and is one of the most important aspects of property law.

Another thing, real estate is a legal designation for private Property, including land and tangible improvements.

Now, real estate investors use private property, including land and improvements for various investing purposes.  

These improvements can include buildings, roads, septic systems, and more.

Also, real estate developers combine undeveloped land with various new structures to increase density and value.

This results in a property that a variety of businesses can use.

So to boil it down to its simplest terms.  

Property is just a physical thing or a right that has or will have value, and belongs to someone.

Now before I move on to the next section, I just want to leave you with this little tip, many people mistakenly assume that the term property absolves them of responsibility.

But that’s not so, property can also act as an opposite of an asset in this respect.

For example: If you own a two-story rental home with a balcony and someone falls from it and breaks their leg, you could very well be sued, held liable, and owe substantial financial penalties.

So, like most things, owning property not only has its advantages, but it also has its drawbacks too!

Land

In the US, a lot of people refer to land as real estate and buildings as commercial Property.

However, in its most fundamental & primal state, "land" is the surface of the earth.

Now, in a legal sense, it includes all-natural objects on or within it.

So real estate is land plus artificial improvements & any natural elements that are there.

Including ponds & lakes and any mineral deposits as long as they weren’t previously sold.

Now while we typically think of houses and buildings as examples of real estate.

This definition can also include rural improvements, such as barns, silos, and even chicken coups, & smokehouses if they’re permanent structures.

Likewise, in economics land is one of the four factors of production.

Since you need land in order to do things such as grow crops, raise livestock, unearth minerals, and develop housing and commercial buildings on as well.  

Lastly, not only is the land a monetary asset, but it is also a natural asset, that supports animals, forests, and bodies of water too.   

Deed

A deed is a legal document in which ownership of a Property is transferred from one person, company, or entity to another.

The deed also includes details such as the date, parties' names, recitals, and consideration.

In some states, the grantor's deed defines the Property.

Now, in Florida, a deed must be signed and witnessed by the grantor and at least one other person.

The grantor must have freely intended to transfer the Property, and the deed should be recorded in the local registry of deeds.

It is a legal document that serves as proof of ownership, whereas the title is used to grant the right of use & possession.

The deed is filed in a recorder's office and has a history of previous owners & the original copy is returned to the owner once it has been recorded.

The deed must also be authentic to show true ownership.

Although a deed still does not always guarantee that someone has ownership of a property.

Therefore, it is important to thoroughly research the Property you wish to buy prior to purchasing.

Appraisals

Residential real estate appraisals are based on past sales in a particular area around the subject property.

Usually staying within a one-mile radius.

Appraisers also consider demographics and the growth of a neighborhood, as these factors can affect the price of a property.

An appraisal also protects the buyer from falling into negative equity or becoming underwater in their mortgage.

It usually prevents the mortgage company from lending more than what the home is worth as well.

Now when a home appraises for less than the asking price, it is said to have come in "low."

So understanding how these principles work will help you understand the value of a property.

Real Estate Investing

In addition to owning a home, you can also put money into buying a house for a rental.  

You can also invest in other forms of real estate as a business venture.

This type of business can involve developing or buying a commercial building and renting it out.

With this strategy, if you take on the role of property manager instead of hiring one, you will have to do marketing to find tenants, do background checks, create a list of reputable vendors, as well as some other things.  

This can require a lot of time, research, and work.

You'll also have to deal with the taxes that go along with real estate investing, whether you try to do them yourself (which I definitely advise against) or hire a CPA or tax attorney.

Now, despite all that, real estate can be a good investment.   

Although, there are some real estate strategies that are at higher risk than others.

But they can still provide high returns if done correctly.   

In addition, real estate provides a great deal of security for a lot of wealthy people’s money.

Unlike stocks and bonds, the performance of their real estate investments usually doesn’t react quite as badly to negative aspects of the economy.

Stocks and bonds are often highly sensitive to interest rates and other economic factors.

Real estate allows for diversification and can offer low risk and high returns.

Additionally, real estate is a tangible asset, which can make it easier to value and manage.

Intangible assets are often based on value approximations.

When working out a real estate investment strategy, there are many factors to look at.

For example, one of the most important considerations when it comes to real estate is location, location, location.

Some investors choose to invest in a specific area, such as Phoenix or Miami, but others choose to invest in multiple locations.  

Generally, most small investors choose an area fairly close to where they live and spend most of their time.

Since they tend to take a more hands-on approach, at least when first starting out.

Video Version: Simply put, What is Real Estate? 5 Fundamental Terms!

The Conclusion

Simply put, real estate is any land along with everything that is permanently affixed to it. Such as houses, detached garages, or sheds on concrete slabs. This can also include all the minerals on the property & any water sources on it as well. Another thing, knowing some real estate terms can be a good start if you want to learn about the real estate market. Finally, investing in real estate might not be a bad idea if you have some time, and/or money & can get a really good grasp of the market and the fundamental concepts surrounding investing in it.