It's all about ROI (Return On Investment) percentages. Lets say I mortgage a property with $20K down and my payments are say, $800 a month. Then I rent it for $1500 a month. If the property is rented for every single month of the year, that gives me a $700/month cash flow which is an ROI on my initial $20K investment of 42% (forty two percent) a year on my initial 20K payment of *my* money.
Now it's "technically" not my money making the mortgage payments, but I am paying taxes on the principle part of that payment. So the actual "realized" return would be more akin to 30-35% ROI. Beat that on the stock market.
On the other side of that coin, if I pay $100K cash for a property and rent it out for the same $1500/mo, that's only an 18% return on the investment, again assuming it's actually got a paying renter in it for 12 months each year. Yes, it's a higher cash flow. But that $100K cash payment isn't working for me as well as it would if I used it to put a $20K down payment on 5 properties that I mortgaged and rented out for $1500/mo each.
Even so, the reality is there will be a month or two of no rental income between renters, and I know that. But still, even a 20% return for 10 months of rental income/cash flow is still better than anything else out there pays now.
