What is 'Income Property'

Income property is property bought or developed to earn income through renting, leasing or price appreciation. Income property can be residential or commercial. Residential income property is commonly referred to as "non-owner occupied". A mortgage for a "non-owner occupied" property may carry a higher interest rate than an "owner occupied" mortgage as it is viewed by lenders as a higher risk.

BREAKING DOWN 'Income Property'

A common practice during periods of home price appreciation is for investors and speculators to purchase residential income properties with the intent that rents will cover their monthly expenses for a period of time until the property can be sold for a large capital gain. As with all markets during times of fast price appreciation, and as with all market bubbles, those that enter the market first and get out first usually do well. Those that enter the market later, and get out last usually don't do as well.

RELATED TERMS
  1. Investment Property

    A real estate property that has been purchased with the intention ...
  2. Income Approach

    A real estate appraisal method that allows investors to estimate ...
  3. Occupancy Fraud

    A type of mortgage fraud, whereby the borrower lies about whether ...
  4. One Percent Rule

    A rule of thumb used to determine if the monthly rent earned ...
  5. Residential Rental Property

    A type of property that derives more than 80% of its revenue ...
  6. Property Manager

    An individual or company responsible for the day-to-day functioning ...
Related Articles
  1. Retirement

    The Income Property: Your Late-In-Life Retirement Plan

    You're nearing retirement age and you don't have the nest egg you need. Here's how an income property can help you make up the shortfall.
  2. Taxes

    Getting U.S. Tax Deductions On Foreign Real Estate

    If your home or second home is not in the United States, you can still get U.S. tax deductions. How many and what kind depends on whether you also rent it.
  3. Investing

    Use Real Estate To Put Off Tax Bills

    Find out how you can build wealth and reduce your taxes.
  4. Investing

    How You Make Money In Real Estate

    If you're interested in the real estate game, make sure you know what factors will affect whether you make money or not.
  5. Investing

    Explaining the Income Approach

    The income approach is one of the three main methods that appraisers use to value property.
  6. Managing Wealth

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in this kind of real estate takes capital, time and careful planning.
  7. Investing

    How Property Rights Affect Economies

    Property rights are laws governments create that enable investors to control, benefit from, and transfer property.
  8. Financial Advisor

    How Does Depreciation Reduce My Tax Bill?

    How the depreciation tax rule can assist real estate investors.
RELATED FAQS
  1. What criteria does a property need to meet to be considered an 'investment grade' ...

    Learn what it takes for institutional investors to consider a property "investment grade," such as real estate investment ... Read Answer >>
  2. Under the Income Capitalization approach to valuing real estate, which of the following ...

    The correct answer is: d) When valuing an entire property, and not just the equity portion in the property, we have to discount ... Read Answer >>
  3. Is it possible to refinance a house you're renting out?

    Find out whether it is possible to refinance rental property. Lenders have strict qualifying standards and expect owners ... Read Answer >>
Trading Center