Is my rental property a good investment?

If one put money in a FDIC insured online CD account such as ING Direct, WAMU, etc., he/she will get slightly better return than regular bank accounts. At this time, the return is close to the inflation rate.

For U.S. stock market, if you invested on S&P 500 index fund over the last 20 years, the annual average return would be at ~10%.

To invest in real estate, longer term investors would be looking at both the cash flow, and the appreciation of the property value.

There is a popular saying "real estate is local". The rent amount and the property value depend on mostly on local situation. For example, if you own a rental property in Silicon Valley near an excellent high school, and you have owned it for a few years, most likely you are doing very well. But if you've just purchased the property not long ago at a high price with 20% down-payment, the rent income may not generate positive cash flow at present time. But still, the property value may increase year-over-year.

To make a sound decision, you need put into consideration for:
. Purchase costs - commission, title insurance, escrow, etc.
. How much down-payment you put in.
. Loan amount, interest rate, and therefore, the points and mortgage payment.
. Property tax, insurance, and other expenses.
. Rent income generated.
. In the future, when you sell the property, the selling price and selling costs.