Investment Property Definition
An investment property is defined as a real estate property purchased to generate a return. This return could be through rental income, capital appreciation from the future resale, or a combination of the two.
What Is Considered an Investment Property?
Any property that generates some form of revenue can be classed as an investment property. Here are the two primary examples of an investment property.
- A rental property that the investor owns for several years and generates consistent rental income from letting it out to one household of tenants at a time. The property can then be sold later in life for a large capital growth return.
- A property purchased for a low price and renovated before being sold to generate a significant return on investment.
There are also these less common examples of an investment property:
- A hotel investment, when a buyer purchases a room in a hotel and generates income from hotel stays.
- A holiday let, when a buyer lets a property out to short-term tenants who are using it to stay in during a trip.
- An HMO investment, when a property investor buys a large house that is let out to multiple tenants at once.
You can read about the different types of investment property available to invest in with our detailed article.