I've looked into this a little bit. There seem to be two ways to go:
- Buy a duplex, triplex, or quad... and then live in one of the units. The only way to make the finances work is to do all of the management and maintenance yourself. This is not a bad strategy as long as you don't mind living in a (small) apartment building, but it's a lot of work.
- Buy a large number of units that can support the expense of a manager and other people to do repairs and maintenance.
You gotta do the math. If you have three units rented out at $600 a month, that's $1,800 a month. Not a lot of revenue. Will it cover the mortgage, taxes, insurance, and maintenance costs, and provide an income to you? Doubtful. However, if you have a day job and manage the apartments on the side, perhaps the rents are sufficient to pay the mortgage, in which case you effectively have a free place to live.
Before the meltdown, the prevailing theory was that you could accumulate a lot of units quickly via real estate appreciation and using that equity as a down payment for another property. Those days seem to be gone in most locales.
Don't overlook the liabilities of being a landlord. In some places (I'm looking at you, Hartford, CT), it is nearly impossible to evict a tenant, even a tenant who isn't paying rent... because tenants have statutory rights. You'll need to make an assumption that some percentage of your tenants won't be paying rent... and that a certain percentage of your units are vacant.
There are forums dedicated to the joys of being a landlord, and tons of books on the subject.