From an investment perspective a property is considered a great rental even if it breaks even or only has a small positive cash flow, and in the Bay Area and beach area here in Santa Cruz, rentals are at a premium. Apartments and homes for rent are hard to find and tenants are still paying top dollar. Another benefit to owning a rental property is appreciation. If you purchase a home or multi-residential property in the Bay Area, it will go up in value. Last, but not least there is a major tax break in the ownership of a rental property.
Depreciation is a deduction for the wear and tear of a property.
Your accountant can figure out the schedule the IRS allows for depreciating a property. This depreciation is a paper write off on your tax returns. Talk to your accountant and realtor about the tax savings of owning an investment property. With a rental you can write off the expenses of that property, and the time you spend working on it. If you manage the property actively and professionally yourself, the deductions are unlimited.