What is an investment property?

An investment property is defined as a property that is purchased primarily to generate rental income or profit from appreciation, rather than for personal use. This type of property is typically viewed as a financial asset, where the owner actively seeks to earn a return on the investment through various means such as renting out the property or waiting for its value to increase over time.

In contrast to the other options, which either lean towards personal use or specific transactional types, the focus of an investment property is its role as a source of income. Properties meant strictly for personal use don't qualify as investment properties since they are not generating any financial return. Similarly, a property rented on a short-term basis may generate income, but if its primary purpose is not investment, such as for vacation homes, it may not fully fit the definition of an investment property. Lastly, while a property set aside for commercial development does have investment potential, it may serve different purposes, such as hosting a business rather than serving primarily as an investment for rental income. Thus, the essence of an investment property lies in its primary function to generate income through rental or appreciation.