Your neighbor is a great example that being rich and being intelligent are mutually exclusive. How can he only charge $3400 in rent for a 1.2M property, it simply does not add up. Doing some quick math, if he bought the property with a mortgage the monthly payments would be almost $6000 per month. If he bought the house with cash, and we assume the market stays flat, the income in real terms is basically zero. But of course anyone that doesn’t live in a cave must realize real estate is not going to be flat, but is on its way down.