In general Annuity refers to an arrangement made between you and your insurance company to either make small payments over time or one large lump sum payment so that periodic compensation can be made back to you at a future date. Annuity is a fixed income for a specific amount of time that is normally used in relation to retirement. If you are planning on investing in real estate, you will be guaranteed a set dollar amount for the duration of your property ownership. Annuity can be paid each month or differed over a specified time period, depending on one’s current financial situation and preferences. Many people prefer for the Annuity to accrue interest over the years as it sits in a savings account while others prefer to be paid immediately through monthly income. Both situations are fine as long as one understands the pros and cons of each. A fixed Annuity will inevitably stay the same over the course of time. A variable Annuity will change in its amount as it is dependent on other investments. Annuity is a great way to earn income on investment properties, therefore investors should have a clear understanding of their contracts before signing.