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Real Estate Companies > Commercial Real Estate • Residential Real Estate |
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Real estate is a legal term which encompasses land along with anything
permanently affixed to it, such as buildings. Commercial real
estate may include office buildings, industrial property, medical
centers, hotels, and retail establishments and is intended to be operated
for profit, which may be in the form of capital gain or rental
income. Capital gain is any profit that results from the
appreciation of an asset from its purchase price. Realized capital
gains occur when the property is sold and returns more money than the
original purchase price. Unrealized capital gains occur when the
property is known to have appreciated in value, but the gain is only
potential because it has not yet been sold. Profit can also be
gained through rental income, whereby a contract known as a lease is made
for the temporary use of property and buildings owned by another person
or company.
In most societies, a significant portion of the wealth is in the form of real estate property. In advanced economies, individuals and small companies are most likely to use a mortgage to purchase land and buildings for commercial use. A mortgage is a bank loan for which the real property itself is collateral. Banks are often willing to make these loans because if the borrower does not make payments they can foreclose, which means they can seize back the property and sell it to regain their investment.
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