This can be a better way to start in real estate, but it's also highly dependent on the specific market, timing, and your skills. It also doesn't scale very well.
You can make the market timing argument for any property. Like I said, I bought in Detroit area in Jan '08. Look at the numbers, the timing was awful. The purchase itself, was not.
Then try, as hard as you can, to realize that if you've been paying attention to house prices over the last decade you've been training yourself to think that this epic once-in-a-lifetime bubble is "normal" behavior for real estate prices. It isn't.
This only scales if the value of the property appreciates and allows you to refi and purchase another property with the equity. If the value goes down, the cash flow will as well.
Actually, for income real estate, it works the other way around: value is determined almost entirely on the cashflow of the property. As a result, you can control the appreciation of the property by improving the income of the property.
