To which I will usually ask "Do you own your own home?" If the answer is no, then that is where I have them start. They should go through the house-buying process with the goal of homeownership. Why?
First and foremost, the best reason is that they need to understand the home buying process. This is difficult to do if you have never been through it. Buying (or selling) a home, a primary residence, is an emotional decision. It is important to understand some of the elements that go into making a home-buying decision.
Ultimately, as a real estate investor, you will be working with buyers - as well as tenants, sellers, contractors, inspectors, brokers, lenders, insurance agents, designers, builders, architects, and others - often all on the same project. Buying your own house gives you a quick education on the issues and complexities that surround such a major purchase. You will be better able to anticipate - and respond to - the needs of your future buyers, if you have been there, done that yourself.
Secondly, you buy to build equity, cash flow and future capital by investing in an income-producing asset. There are various tax benefits to owning your own property. And you have to start somewhere. You may not be able to afford your dream house at first, but using many of the best qualities of real estate - leverage, appreciation, cash flow (get some renters), tax deductions - you will be able to sell and move on to a better house. Or perhaps keep your starter house and rent it out, while you move on to a better home and more desirable neighborhood.
Third, you get to practice using your real estate investment techniques. There is nothing wrong with using conventional financing for your own primary residence. But as your arsenal of investment techniques grows, you will be able to purchase, remodel, and sell properties using less conventional and more lucrative methods. The education you get from actually buying your own property will teach you more than you can ever get just sitting in a classroom.
And if you understand home-buying, you will be more convincing and believable to future buyers and sellers with whom you will be working as an investor.
Use the expertise of real estate professionals to get started and learn all you can from them as you start your real estate investing career. Seek out investor-friendly real estate brokers to purchase your first house - as you are not a typical first-time homebuyer. Resale value and location in an emerging market will be more important factors for you than they might be for other homebuyers (who might prefer a move-in ready house in an established neighborhood with a good school district for their kids).
Your real estate broker will be able to refer you to the best lenders, escrow and title agents, home inspectors, contractors and other professionals. Hire the best, and learn from them. Add them to your database as future team members.
Meanwhile, keep learning. Participate actively and regularly in your local real estate investor association. Read all the books you can on real estate, financial literacy, investing, marketing and entrepreneurship. Network with other investors. And one thing I found very valuable while I was learning to become a real estate investor: lend money to other investors you know and trust.
Why lend money? Because now you have entree to that investor's network, knowledge, numbers, marketing, decision-making criteria, team members, experience and expertise. You can guarantee they will keep you in the loop on future opportunities, so you will continue to learn from them beyond your initial investment.
Most investors are looking for private money - and it doesn't need to be a lot. Many of my private investors have loaned as little as $25,000 - $35,000 to help with a down payment. You as the investor get a great rate of return as you get a great education. With the caveat, that you should research your investment and the investor carefully before you part with your funds. Do your own deal analysis, and make sure the deal looks like a good deal to you - otherwise, don't do it.
So get started looking for your own primary residence. There may be other real estate deals you do along the way, but set that as your initial goal, and get going!