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Erin,
About six years ago I started investing in rental properties to build income for future retirement. It is working well for me. Thank goodness there is room for mistakes because I have made plenty. The two most important lessons I have learned are:
1. There is an old saying that "In real estate, the profit is made at the time of the purchase". In other words, I have not found a way to profit by buying small properties at or near market prices. With this in mind, I have found HUD foreclosures to be an excellent source of discounted properties in good condition. An experienced HUD realtor will make the HUD process simple.
For this same reason, I don`t buy "fixer uppers". Money invested in start up rejuvenation and vacancy during rejuvenation is the same thing as a higher price.
2. I dig deep to determine if other landlords in the neighborhood are able to find renters quickly. One way I do this is to tour the neighborhood each weekend and record all the "For Rent" signs. I will do this for 4-6 weeks. This gives me a real good idea if there is adequate demand for another rental in the area. I also make phone calls to many of the numbers on the signs to find out what price the market will support. In other words, I pick the neighborhood then I shop for a house.
Using these techniques and many of the ones previously posted, I have been able to have high occupancy and positive cash flow in a retirement business. I highly encourage this business and wish you luck.