What is investment real estate?

Investment real estate refers specifically to properties purchased primarily for the purpose of generating income rather than for personal use. This includes various types of real estate, such as residential rental properties, commercial real estate, industrial properties, and land that can be developed or leased.

Choosing properties solely for generating income is essential because it defines the intent behind acquiring the asset. For instance, a landlord who buys a multi-family unit to rent out to tenants is clearly engaged in investment real estate. The focus is on the financial return, whether through rental income or capital appreciation, rather than the enjoyment or use of the property for personal enjoyment.

Other options suggest different intentions or definitions that do not align with the primary concept of investment real estate. Properties intended for personal use pertain to primary residences or vacation homes, short-term rentals might fall under investment but are not fully inclusive of all investment real estate, and homes sold after renovations often refer to the flipping of properties intended for profit, which may not consistently generate ongoing income. Thus, the most accurate and comprehensive definition aligns with the notion of properties acquired to earn income, distinguishing investment real estate from other types of property ownership.