How Do Rental Properties Build Wealth?

Rental properties generate wealth through three powerful forces: cash flow, appreciation, and equity growth. Rent payments create steady income, while the property’s value typically rises over time. Meanwhile, each mortgage payment builds ownership equity.

In my experience, real estate is one of the few assets that allows you to use leverage safely — borrowing money to buy appreciating assets while tenants cover the costs. Over time, that combination of income, appreciation, and debt paydown can compound dramatically. It’s a slower path than day trading, but far more dependable.