This is an old practice of commercial real estate investment. A person will buy the property and rent it to someone. All the mortgage, costs and taxes will be paid by the owner and landlord and these expenses will be charged as rent from the tenant. The owner can also incur a profit by charging more but its always recommended to charge rent for the expenses until the mortgage has been paid completely so that the rent becomes a profit.
The property value might also rise over the course of the mortgage and the property could become a more valuable asset. According to the Census Bureau, the value of real estate has increased consistently from 1940 to 2006 and then it has dipped and again increased from 2008 to 2010.
There are also chances that your tenant might damage the property or you might end up getting no tenant at all. This will result in a negative cash flow every month and you need to borrow from others for your mortgage payments. This also depends on the area of the property because if the rental rate is lower, more people would like to rent.
The biggest difference between a rental property and other investments is the amount of time and work you have to spend in maintaining your investment. Buying a stock will simply sit in your account and increase in value whereas for a rental property there might be more responsibilities for a landlord. If any problem arises, it's the landlord who will get the call. So you need to choose the best investment based on your needs.
For more information about property investing, visit http://www.rementor.com/n-propertyinvesting.shtml.
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