Rental Income Rises With Inflation

• If you have a mortgage on the rental house, those payments remain stable. But rents tend to increase over time with rising inflation. When the mortgage and other expenses associated with maintaining the rental house remain steady while rents go up, it increases the property's cash flow. When inflation heads higher, you can't force a bank to pay higher interest rates or make a company pay higher dividends, but you can raise the rent.
  
  

Insured Against Loss

• While traditional investments such as stocks and bonds can be a fine way to save for retirement, there is no protection from loss if those assets decline in value. The owner of a rental home, however, can buy insurance for the property that will reimburse him if fire or a natural disaster destroys the house. Additional coverage can reimburse the owner for rental income lost during repairs.
  
  

Leverage Can Increase Returns

• If you use $100,000 to pay cash for a house, you will have one house. However, real estate investing allows you to control a property with the use of the bank's money. In other words, if you use the $100,000 as a down payment for three properties, you can increase your returns using the power of leverage as long as you understand this involves more risk. However, as long as the rental income is higher than the mortgage payment and other expenses, rental houses can be winning investments.
  
  

Tax Advantages

• The IRS taxes a rental house differently than a primary residence. A rental house is a business and the government taxes it like one. You can deduct any expense necessary to manage and maintain the rental house on your income tax return. That includes interest on mortgage payments, insurance, cleaning, painting and landscaping. Even the cost of advertising for renters and mileage driving to and from the property is tax deductible.