Instructions
Decisions
Choose a general era to model, steam or diesel. Steam is more popular, but turntables are required to turn locomotives on a shelf layout. They can be wired using a dpdt switch; this is not terribly complicated, but for a beginner it means learning more about wiring.
Choose between freelance modeling or a particular railroad. Do both by picking a railroad but inventing your own towns. For steam, the amount of affordable rolling stock, especially passenger equipment, has shrunk in recent years. If you like the passenger cars you see in movie westerns, you've seen the old Virginia &Truckee cars that Hollywood purchased from the railroad decades ago. The Denver and Rio Grande railroad is consistently available, and Colorado is cheaper to model because there are few trees.
Fill towns with older brick buildings so that either steam or diesel eras look right. You can do loads of historical research, but if you wish to model a particular year, finding the precise railroad rolling stock becomes more difficult and expensive, unless you scratchbuild it yourself. However, scratchbuilding cars is not common in N scale because of its small size.
Decide between an along-the-wall layout or a table layout. On a table the trains just go round and round. Along the wall it is easier to portray the illusion that the train is actually crossing space.
Plan operation and train schedules, not just how the layout will look (although many model railroaders end up falling in love with scenery building and rarely run their trains). Make lists of your givens and druthers. Visit hobby shops or study internet hobby sites to get ideas. This is as much fun as building the railroad itself and prevents the frustration of having to rip up everything you build for lack of good planning.
Construction
Choose between (new digital) DCC wiring or (old) DC. If N scale is chosen because of cost, go with DC. DCC is wonderful for running many locomotives independently but doubles the cost of the entire railroad. To prevent locomotives stalling on dirty track or on the dead frogs of Atlas switches (called turnouts, in model railroad parlance), make sure the loco has at least eight-wheel electrical pickup. If you cannot determine this from advertisements for the locomotive, you will have to do research, perhaps digging into old issues of Model Railroader or other publications.
Design the layout for interesting operation, not to store trains. For instance, each town should contain one runaround track (a track arranged with two turnouts so that a locomotive can run around to the other end of its train) and sidings for industries. Design one town to cause a traffic jam.
Sketch a layout with three towns on an L-shaped shelf that would fit in a bedroom. Town A is at one end, connected to Town B in the middle of the layout. Town A is also connected to Town C, at the other end, perhaps by a tunnel under Town B. But B and C are not connected, though B could have a coal mine to take empty coal cars, and through a tunnel under a mountain be connected to a powerplant in C that emits empty coal cars. Then you would have a reason to run trains from B to C and vice-versa, causing a challenging situation when they meet in A.
Paint a 2-foot-high backdrop on the walls or staple or tape a roll of cheap linoleum (use the underside) to the walls to receive the paint, curving the corners. On bookshelves or wall shelves glue several layers of Styrofoam sheets. This insulation material is available in 16 inch by 4 feet sheets, and can be cut with a kitchen paring knife. Glue track directly to the Styrofoam. Cut the rails with pliers. Wire in blocks with dpdt slide switches for two-person operation.
Build mountains by adding layers of glued Styrofoam. Carve then cover with plaster mixed with cheap latex paint, in brown, gray, and red colors. Any time you don't like what you see, take the paring knife and cut parts out (that's the best feature about Styrofoam for models). Keep a vacuum cleaner handy, because Styrofoam makes a mess.
Operation
Clean the tracks and fix track irregularities. This may involve filing the points of a turnout or relaying track that has become kinked or out of scale.
Plan a schedule of mixed trains. (A mixed train is made up of both passenger and freight cars, common in the steam era on smaller railroads.) The passenger car(s) should be left next to the depot in each town at a specified time, while the freight cars are switched to particular industries. Transportation is a race against the clock: pick up empty coal cars from the power plant in town C, and pick up full coal cars from the mine in town B.
Plan a train that goes from C to A to B and back if you are operating by yourself. If there are two of you, one operator should run a train from B to A and back, the other from C to A and back. The resulting bottleneck at town A makes it fun, like playing chess with a clock (but with nicer scenery). Because your track is glued to Styrofoam and not nailed into wood, it will be easy to change the layout as you spot areas for improvement.