What am I missing with rental properties?

[Jared Baker]

I have been thinking a lot about getting into rental properties, they seem like a good investment to allow me to retire early but also still do the things I want to do.  My question is how do you create a positive cash flow from rental properties early on?

I keep hearing on the BP Podcast and reading on the forum about how people are getting into rentals and making positive cash flow right away, or at least that is the way it sounds to me.  That doesn't make any sense to me.  (I am not very good with the numbers side of things yet, but bear with me)

If someone buys a 4-plex for $140,000 and rents each unit (lets say $600 a month) out to meet the payments for the loan and expense for the year and nets a profit of $100 a month that is only $1200 a year that someone is putting in there pocket.  Assuming they used any form of loan they will have a period of possibly up to 30 years that they are repaying the loan.

So although this is positive cash flow it is a very small amount compared to what could be earned if the property is completely paid for.  So is the idea of getting into rentals to continue to buy using financing until the small amount of net income earned is a substantial amount that can be put toward paying off the properties sooner so that maximum profit can be earned?

Hopefully my question makes sense.

Thanks for the help!