investment payoff

[S B]

another newbie question, if you don't mind:

Why invest in real estate?
I can see the benefit if your tenant situation produces a net cash flow.

But if you don't have positive cash flow, when do you actually realize the profit?

I'm thinking it's either :

1. hold on to the home, have the tenants basically pay your mortgage for a few years, and then refinance and pocket the refi check.

2. sell the house, pocket the profit on the sale

Are there any other 'cashing out' scenarios that I'm missing? Which of these scenarios is the most common in the real world?