The most important things are to do your homework, do the math, keep a financial cushion, don't have unrealistic expectations, and stay on top of management, which includes maintenance and adequate risk transfer (insurance). Those are just some of the bigger points. There are plenty of fine points too. Be prepared to learn on the job.
The linked article is thought provoking for the local 1-4 unit potential landlord:
David and Michelle Haisley from Fort Wayne, Indiana, weren’t happy with the performance of their retirement funds, so they made another investment -- a foreclosed home for $27,000.
As the housing market recovers from the worst bust since the Great Depression, neophyte investors like the Haisleys are following the lead of private-equity firms like Blackstone Group LP, investing in properties they can pick up cheaply, rent and sell when values rise enough. Home prices rose 4.6 percent from a year earlier in August, the biggest gain since the end of the real estate boom in 2006, according to a CoreLogic Inc. index.
Investors bought about 66,780 homes in August, the highest since the beginning of the foreclosure crisis, according to Bloomberg calculations based on National Association of Realtors data. Investors’ share was 18 percent of sales. About 90 percent of those homes went to people with fewer than 20 properties [emphasis added], Yun estimated.