Washington 60-Hour Fundamentals – Valuation, Financing, and Lending Practice Exam

Question: 1 / 400

What is the definition of "investment property"?

Property bought for personal use and enjoyment

Real estate purchased primarily for generating income

The definition of "investment property" is accurately represented by the choice that states it is real estate purchased primarily for generating income. This is a clear characterization because investment properties are typically acquired with the goal of earning a return on the investment through rental income, the potential for property appreciation, or both.

This understanding is grounded in the fact that investment properties are not meant for personal use or enjoyment but are instead a business asset. Investors often seek properties that can provide cash flow, tax benefits, or increased value over time. The differing characteristics of properties designed for personal use, vacation purposes, or those owned by family members serve different purposes and do not align with the primary goal of generating income, further reinforcing the accurate definition of investment property.

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A property used for vacation purposes

Property owned by a family member

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