The income of a property is mostly made of the rents paid by the tenants, expenses are made of the cost of operating the property, including debt. Typically, a stabilized asset will generate a positive cash flow (income minus expenses) that will be distributed to the investors.
An investment property is an asset that can be depreciated over time, typically resulting in tax savings applicable to investors via a K1 form.
Through the ownership of a property, rental income from the property pays the debt service (loan), including the principal. Upon sale of the property principal reductions will be returned to investors.
Single family homes (up to 4 units) have their value based on property comps (comparable properties) in the same vicinity. The value of a single family home can be increased through renovations, or additions (new rooms, new floor). A multifamily property is a business that is valued by its Net Operating Income (NOI) and Cap Rate (Capitalization Rate) of the market. Through physical and operational improvements, you can increase the value of the property by increasing NOI.
Banks offer investors loans on the acquisition of an asset with 20%-30% down payment allowing to control an asset with a value 3 to 5 times larger than the money invested. Returns are increased thanks to this leverage.