This blog is intended for educational purposes only. None of these posts are meant to give legal or financial advice. If you need advice you should consult an appropriate professional.

Sunday, September 1, 2013

The three types of property

Property makes the world go round, and it doesn't have to be something physical.  Property is considered something that is owned or is under the control of someone and has some kind of value.  There are three types of property:  real, tangible personal, and intangible personal.

Real property is real estate.  It's anything that is considered permanently affixed to land.  Some examples would be a house, air conditioning unit, land, and trees.  Hard to believe you can own a tree but you can.  Just think of it as something that stays in place.  Real property is usually considered an asset because it generally goes up in value and can produce income.  I rent a place right now so the place I live is an income producing asset to my landlord, and I get a nice place to live.  It's a win win!  Some people have built real estate empires.  Who knows the next person could be you.

Tangible personal property is anything that's touchable or physical that is not real property.  This includes a lot of stuff.  A car, books, TV, and clothes are a few examples.  I would say this is the most common type of property and the most widely held.  Everybody owns something even if it's just a toothbrush.  How could one make income from tangible personal property.  That's a tough one.  I would say a vending machine is a good example.  My opinion is it's best to limit the amount of tangible personal property in your life because it almost never goes up in value and hardly ever produces income.  Plus it makes it harder to move.

My favorite personally is intangible personal property.  This is something that has value but is not touchable or physical.  Some good examples are:  stocks, a bank account, an insurance policy, and a blog.  I like this one because it has the least amount of hassle.  There's nothing to clean or maintain.  I have chosen to focus on this one almost exclusively to build my asset base.  I know some people though who want something more real.  That's fine.  To each his/her own.

These are the three kinds of property in this world.  It is my view that it's best to focus on building up intangible personal and real property because they have the ability to appreciate and produce income.  Happy property building! 

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