What is meant by the term "investment property"?

The term "investment property" refers to real estate that is acquired with the intent of earning a return on investment, typically through rental income, appreciation in value, or both. This means that the property is not intended for personal use, but rather as a financial asset.

When someone purchases a property to rent it out, for example, they are looking to generate income from tenants. Similarly, properties bought with the expectation that their value will increase over time can also be classified as investment properties. This distinction is essential in real estate because the motivations and financial strategies involved with investment properties differ significantly from those associated with personal residences or properties intended solely for personal enjoyment or use.

In contrast, properties that are bought solely for personal use, owned by a single family without any intent of generating income or appreciation beyond personal enjoyment, or a primary residence, do not fit the definition of an investment property. These types of properties serve different purposes and investment strategies.