Definition

An investment property is a real estate property purchased with the purpose of earning a return on the initial investment (amount of money required to purchase the property). This return can be earned through income generated by the property through rent or through profit from the eventual sale of the property. Investment properties are different from non-investment properties in that they are not intended for personal use by the buyer.

Often investment properties are viewed as an alternative to investing in traditional stocks and bonds because of the potential to earn income paid out as cash-flow, as well as the potential for appreciation in value. Investment properties can also be popular based on the tax benefits received from the depreciation of the property.

Investment Property Examples

Investment properties can range in size from a condo or single-family home to a large mixed-use property and held for any duration of time.

For example:

  • A single-family home purchased, renovated, and quickly resold for a profit (also known as flipping)
  • A large office building that generates income through rent that is passed down over multiple generations

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