What does "investment property" refer to?

The term "investment property" specifically refers to a property that is acquired with the intention of generating income, typically through rental activities. This type of property is not used as a primary residence but rather as a venue for investment returns.

When someone buys a property with the purpose of renting it out to tenants, that property qualifies as an investment property because it is expected to produce profit through rental income or potential appreciation in value. This distinction is critical in the real estate and mortgage industries because investment properties have different financing requirements, tax implications, and management obligations compared to primary residences.

In contrast, properties used as primary residences or inherited from family do not align with the definition of investment properties since they are primarily for personal use or transferred ownership rather than purchased for generating income. Additionally, a property with tax liens indicates financial or legal issues that affect ownership rather than its status as an investment. Thus, the correct identification of an investment property lies in its purpose of generating revenue, making the choice focused on rental income the accurate one.