Cash flow is usually the first thing people think of with rental properties. The goal is to charge market rent, pay the mortgage, pay expenses like property management fees and HOA, alocate some money for maintenance, capital expenditures like a new roof, and the occassional vacancy, and still have money left over. This left over is cash flow. 

This can be done when you first buy the property or it can be done over time. The idea is that you invest in some upgrades or renovations, and that your home value increases by more than what you spent. It is easiest to do when you DIY, but don't forget to consider your time investment. This is the source of income where you can make the biggest mistakes. Scope creek is when you think you may as well replace X becuase you're already replacing Y. This can easily cause you to go over budget and not get a good return on the investment. Make sure you upgrade to what fits in the neighborhood and fits the rental rate your trying to achieve. Often times, a fresh coat of paint and replacing all the light fixtures can increase your desirability and value more than focusing on one room like a kitchen or bathroom. Make sure you pick finishes that 'speak the same language' as the rest of the house.

Depreciation is a benefit upfront but will be recuporated later. Here's how... Every year on your taxes, you can take a portion of the value of the property and decrease that amount from your taxable income. You save the money in taxes now, but when you sell the property, you will need to pay the full amount of taxes that was depreciated over time. The benefit is that you can use the tax money you saved to invest in more real estate or something else. If you want to sell the property, but you don't want to pay the taxes, you can do a 1031 exchange which allows you to roll over the profits and tax value from one rental property into another one or more rentals.