What Is Real Estate? Property Types and What They Mean for a Renovation

Real estate is land and the buildings on it. It is usually sorted into four kinds: residential, commercial, industrial and land. For anyone planning a renovation in New York City, the more useful question is which kind you own, and in what form, because that decides who must approve the work before it starts.

The four kinds of real estate

• Residential. Single-family houses, townhouses, condominiums, co-ops, two- to four-family houses and vacation homes.
• Commercial. Offices, stores and shopping centers, hotels, and medical and educational buildings. An apartment building owned to produce income is often counted as commercial even though people live in it.
• Industrial. Manufacturing buildings and warehouses, used for production, storage and distribution.
• Land. Vacant lots, sites being assembled for development, and working farms and ranches.

The category matters because zoning, construction and sale are handled differently for each.

What you own decides who approves the work

A co-op

In a cooperative you do not own the apartment itself. The New York Attorney General’s office puts it this way: a purchaser buys shares in a corporation, the shares are allocated to a specific apartment, and owning them entitles the purchaser to a long-term proprietary lease (NY Attorney General). That lease is why a co-op renovation begins with the board. The model alteration agreement published by the New York City Bar Association opens by noting that the lease allows no alterations without the corporation’s consent.

A condo

A condominium owner has separate ownership of the unit and an undivided interest in the common elements of the building. You own more than a co-op shareholder does, but the structure and the pipes and wires that serve other units are shared, so condo boards review alterations too. The City Bar publishes a model alteration agreement for condominiums as well.

A townhouse or house

Here you own the building and the land, and there is no board. The approvals are public ones: Department of Buildings permits for most construction, and, in a landmark building or a historic district, the Landmarks Preservation Commission. The Commission reviews most exterior changes to front and rear facades in historic districts, and its permit is required for interior work whenever that work needs a Buildings Department permit.

Commercial space

A business usually leases its space, so the lease and the landlord come first, followed by the same city permits. We cover that in our note on planning an office project.

Borrowing to renovate

A mortgage is a loan secured by the property and repaid over a set term. Most mortgages pay for a purchase only. A few are built to pay for the work as well.

The most familiar is the Federal Housing Administration’s 203(k) program. According to the Department of Housing and Urban Development, it lets a buyer or an owner combine the purchase or refinance of a home and the cost of renovating it in a single loan from an FHA-approved lender. On HUD’s fact sheet as revised in November 2024, the Limited version covers non-structural work up to $75,000, and the Standard version is for major work, has a $5,000 minimum and requires an FHA-approved consultant. HUD revises these limits from time to time, so check the current sheet. Both require building permits to be obtained before work begins.

The type of property matters here too. HUD’s list of eligible properties includes one- to four-family homes, townhomes and eligible condominium units, with improvements limited to the unit’s interior. It does not name co-op apartments. HUD’s own comparison sheet shows a conventional alternative, Fannie Mae’s HomeStyle Renovation loan, as accepting a unit in an eligible cooperative.

We are builders, not lenders. Treat this as a map of the ground and ask a lender what you qualify for.

For the work itself, see our pages on co-op renovation, apartment renovation in NYC, townhouse renovation and commercial spaces renovation.

Questions people ask