For decades, retirement meant pensions, Social Security, and a carefully guarded 401k. Today, more responsibility (and more opportunity!) rests on individual planning. Enter: real estate.

A thoughtfully chosen rental property can serve as both an investment and an income stream. Unlike stocks that may require selling shares to generate cash, rental property can produce ongoing monthly income while you continue owning the asset. That cash flow can supplement retirement accounts or, in some cases, replace part of them.

There’s also the inflation factor. According to the U.S. Bureau of Labor Statistics, rents have historically trended upward over time, and shelter costs are a major component of the Consumer Price Index. While nothing is guaranteed, landlords often have the ability to adjust rents periodically, whereas a fixed-rate mortgage payment remains constant. Over time, that spread can improve cash flow.

Leverage is another differentiator. With financing, investors can control a larger asset with a smaller upfront investment…though this also increases risk and must be evaluated carefully.  Then there are potential tax advantages. The IRS allows rental property owners to deduct ordinary and necessary expenses, including mortgage interest, property taxes, operating expenses, and depreciation. Tax treatment varies by situation, so professional guidance is essential.

Of course, real estate isn’t passive magic. It requires due diligence, reserves, and a tolerance for vacancies, repairs, and market shifts. It’s also less liquid than stocks. But as part of a diversified strategy (alongside retirement accounts and other investments), a rental can help create multiple income streams.