I’ve never done it, but looked into investment properties quite a bit.
There are two main ways to make money from a long term property, you can try to be “cash flow positive” and actually make money each month off or your rents. You have to remember you’re usually paying a mortgage, taxes, upkeep, advertising costs, and other smaller items before you even get into whether or not you want someone to manage the property for you. So it’s fairly difficult to make money just off the rents coming in. In my area, most of the places that can make money this way are multi-family homes. Usually 4-plexes or more units in a apartment complex or condo setup. It’s rare to see a duplex or single family home that will make money monthly. Of course more units usually means more initial investment and more work.
Most smaller investors (anyone who’s not developing a huge complex) seem to be happy with breaking even off of the year to year expenses and just make money off the appreciation of the property between when they buy and sell it. Most in fact seem to lose a little each year when you figure in large repairs like AC units, roofs, and any sort of renovations. So you’d look for up and coming areas or prime real estate that you can hold on to for a while.
The other side of the coin is “flipping”, which means you buy a run-down place, fix it up, and sell it for a profit. I think this is probably more viable in an up real estate market because there aren’t so many properties just waiting for a buyer. There are definitely people who make a lot of money at it though.
If you’re seriously looking at the whole thing, there are real estate companies that specialize in investment properties and rentals. You may also want to read a book as it will cover a lot of things you might not think of otherwise. I liked Buying and Managing Residential Real Estate.
As far as how to get started. I think the easiest way would be to buy a duplex, rent out half, and live in the other half. This is what I was considering doing. Your rent will be subsidized by the rent from the other half most of the time, you’re on site for repairs if they’re needed, and you can keep an eye on the place pretty easily. Meanwhile you’re gaining equity in the place. The downside is you live right next to your tenants, but if the thought of dealing with one tenant puts you off, having 20 down the road might not be your cup of tea.