For Investors

• The first of these is cash flow.  What is cash flow exactly?  Well, to put it in simplest terms, cash flow is what money you have left over after the mortgages, the taxes, and the insurance have been paid.  Again, the tenant pays you rent, and that money pays off these items.  Whatever is left over goes into your pocket......and it builds wealth.
• Though many people buy rental property for "cash flow," the real benefits that will build your net worth lie elsewhere.  The second main "benefit" from buying rental property is the tax shelter that it creates for you.  What does this mean exactly?  Well, each time you buy a rental property, the IRS allows you to "depreciate" that property over 27.5 years.  In other words, you can take this depreciation expense against your active income from your job.
• The third main benefit from owning rental property is appreciation.  As we know, not all debt is bad debt.  In fact, any type of real estate debt you have is the best type of debt to have, for it is appreciating debt.  Again, your home may not appreciate at 10%, or even 5% every year, but at the very least, it will go up over time.  This is the area that most real estate investors build their long-term wealth.  Buy the properties, and then hold them.
• The last benefit from owning rental property is achieved through the paying down of the principal balance on your mortgages.  Again, the rent you receive from your tenants will go towards paying those mortgages.  Most of that money goes towards interest the bank charges you, however, some will go towards paying down the debt you owe.  Over time you will build equity through paying down the loans as well.

Cash flow is a wonderful thing that will allow you to continue buying properties.  Cash flow allows you to leverage yourself, and control more appreciating assets, more real estate, etc. 

Be informed and get to know your legal rights as a landlord.