Real estate purchased for profit-generating purposes.
An investment property is real estate purchased for profit-generating purposes, unlike owner-occupied (primary homes) or second homes (typically vacation homes). Profit can come in the form of rental income, value appreciation, or both.
Any residential property (1-4 units) can be considered an investment property. There are more stringent requirements (e.g., larger down payment) to qualify for an investment property, and their associated interest rates are higher than those for primary (owner-occupied) purchases. An investment loan is used to purchase an investment (commonly referred to as a "rental") property.