When investing in real estate, consider the location, property condition, potential rental income, and market trends. For example, if you buy a property for $200,000 and you can rent it out for $1,500 a month, that gives you an annual rental income of $18,000. If your expenses (mortgage, taxes, maintenance) total around $12,000 a year, your net income would be $6,000, which is a 3% return on your investment. Keep in mind that market trends can significantly affect property values over time.

Cash flow refers to the money that comes in and goes out of an investment. For real estate, this typically means the rental income received minus all the expenses associated with the property. Positive cash flow means you earn more from the investment than you spend, while negative cash flow indicates you are losing money.