Types of Investment Properties
Residential -- Rental homes are a popular way for investors to supplement their income. An investor who purchases a residential property and rents it out to tenants can collect monthly rents. These can be single-family homes, condominiums, apartments, townhomes, or other types of residential structures.
Commercial -- Income-generating properties don't always have to be residential. Some investors—especially corporations—purchase commercial properties that are used specifically for business purposes. Maintenance and improvements to these properties can be higher, but these costs can be offset by bigger returns. That's because these leases for these properties often command higher rents. These buildings may be commercially-owned apartment buildings or retail store locations.
Mixed-Use -- A mixed-use property can be used simultaneously for both commercial and residential purposes. For instance, a building may have a retail storefront on the main floor such as a convenience store, bar, or restaurant, while the upper portion of the structure houses residential units.
An investment property is purchased with the intention of earning a return through rental income, the future resale of the property, or both.
Properties can represent a short- or long-term investment opportunity.
Investment properties are not primary residences or second homes, which makes it harder for investors to secure financing.
Selling an investment property must be reported, and may result in capital gains, which can have tax implications for investors.