What is meant by "investment property"?

Investment property refers to real estate that is acquired primarily for the purpose of generating income or profit. This can come from various sources, such as rental income, appreciation in property value, or resale for profit. Investors typically seek these types of properties because they offer the potential for economic returns that can exceed the initial purchase price over time.

In contrast, real estate intended for personal use serves as a primary residence and is not primarily focused on generating profit. Similarly, properties bought solely for vacation purposes often do not provide a consistent income stream and are usually not designated as investment properties unless they are rented out when not in use. Lastly, properties that are received as gifts do not involve the buyer’s intent to generate income or profit, as they are not purchased due to an investment strategy. Thus, investment properties distinguish themselves by being specifically acquired with an earning potential in mind.