Slowly cruising 16th Street between Central and Cocoanut on a cool October morning, I spotted the house I was after. Peeking out from behind a big oak, it looked like a Sarasota High School outbuilding-white with bright orange trim, a little rundown. It was a small, poorly landscaped frame house, set in the middle of a big yard; and the sight brightened my spirits quickly. I had expected much worse.

Hunting investment property in Sarasota, you can't be too picky about your prey.

As a real estate agent for 10 years, just then learning to invest, I started that day in 2002 as always, scanning the MLS "hot sheet" for any possible deal. (The hot sheet is a daily update on new listings and changes in the status of old listings.) Often, a price and house can look better on paper than they really are, but I made the trip, anyway, and anxiously approached the stereotypical little old lady painting in the back. A quick chat and a tour later, I was riding back home to write my offer and present it to her agent. The house was mine by the end of the day for a mere $112,000. The mortgage payment would be $700, and the rent, including the detached apartment, would bring in $1,200 a month. I was on my way.

Two years, one eviction and four tenants later, the house is still rented and worth probably $140,000. I plan to keep it.

That was when the market was hot, but not sizzling like it is today. From the low end to the luxurious, the temperature keeps rising, with prices rising so high that the best advice for entry-level investors might be boiled down to one sentence: Move to North Port.

But hundreds of savvy Sarasota investors are still making a living, or at least supplementing their income, by investing in residential real estate. And all the recent appreciation doesn't mean you've missed your chance. Both investors and real estate agents say there are opportunities to rehab houses, buy rental property and even to buy and sell almost immediately at a profit. You need just four things: access to at least some money, a desire to hunt houses, contacts to help you find them, and a little bit of nerve.

First, the discouraging news. According to a July report from the Florida Association of Realtors, sales of existing homes in Florida rose 19 percent from May 2003 to May 2004. In Sarasota, the median sales price of a home this May was $273,500. Last May, it was $223,000. For condominiums, the median sales price jumped from $188,000 to $245,000.

The average time on the market for a Sarasota home right now is about 100 days, but that figure is deceiving because it includes ultra high-end properties that often stay on the market a longer time. Anthony and Luanne James, a young couple relocating to the area from New Hampshire this summer, provide a picture of how difficult it is to find a reasonably priced home. The first house they made an offer for, at full asking price, sold for $5,000 more than that. The second house they tried, offering 99 percent of list price, went to a higher bidder. They landed their new home on the third try, snapping up a $167,000 house the first day it went on the market.

"I just thought we'd never find a house in our price range, or never find a house at all," Luanne James says. What made it even tougher was that the Jameses were in New Hampshire, while Luanne's mother and I searched for a house. "Before you knew it, it was too late, and somebody else had it," she says.

So where do you find the "deals"?

"You can find them, but it's sure getting harder," says Bob Sanders, a handyman who's been investing for five years.

And it's not really that easy in North Port, either. There's currently a resurgence of land sales in South County reminiscent of the rampant speculation of the 1970s and 1980s. Investing in homes still requires the kind of diligence necessary anywhere. The old adage applies: If it were easy, everybody would be doing it.

You first need to know what kind of a deal you want and can afford. Pat Brester, an associate at Florida Sun Realty Corp., was a strength and conditioning coach with the Cincinnati Reds until getting his real estate license two years ago. He learned quickly what people in the business have said for years. You don't make money selling real estate; you make money owning real estate.

"I knew that going in," Brester says. "I looked around at all the people that were fairly wealthy, and, if they were in real estate, they were investors. I just tried to control the most real estate I could with the least amount of money."

He started slowly and relatively small, buying a 42-year-old, three-bedroom, two-bath house that had not been updated. He found it when it popped up on the real estate hot sheet after a deal fell through. He sold the house for about a $6,000 profit after fixing it up and renting it for five months.

Brester says one of the keys to successful investing is understanding how to use mortgages to provide investment capital. He got his mortgage broker's license last year to better learn creative ways to put deals together.

Here, in general, is how it works: Find a lender who will give you the largest possible mortgage for the property you choose. Fix up the house, hopefully with inexpensive cosmetic changes such as new paint, carpet and maybe some minor repairs. Then you can either rent the property for some positive cash flow, or sell it if your repairs added enough equity. After the house appreciates, you can refinance, taking out enough cash to use as a down payment on another property.

"The more you can leverage the money, the more property you can control," Brester says. "If you're making 10 percent, it's better to make 10 percent on someone else's money."

According to an annual National Association of Realtors survey, the improvements that provide the most return for your money are bathrooms and kitchens. But those are expensive jobs, and the less you spend, the better. Best to find a property that needs just the cosmetics and keep your cash outlay to a minimum. Luckily, pastel bathrooms and terrazzo floors are back in style.

With interest rates as low as they have been for several years, almost endless possibilities for mortgages exist. Mortgage brokers, traditional banks and private lenders all offer different advantages to the investor. Whereas banks typically can get you a better interest rate with lower closing costs, mortgage brokers often can be more creative working with credit challenges and uncommon loan programs.

Popular now are interest-only loans, where your total mortgage payment goes toward interest, while the principal amount of the loan remains the same. It usually means a lower rate and lower monthly payments. That helps a cash-poor investor who is not investing long-term.

"It increases cash flow on the property, and in my younger investing years, I'm trying to hold properties for just five, six or seven years," Brester says.

Another loan product used to be just for the sophisticated investor, but flexible mortgage loans now are popular throughout the industry. With those programs, you are given four choices each month on how to pay your bill, based on a 30-year loan, a 15-year loan, interest only or a minimum payment. If you have a month with a vacancy or a major repair, you can defer that month's principal payment considerably.

If this all sounds a little risky to your conservative financial sensibilities, consider this scenario:

You have $25,000 to invest, and you want to start a college fund for your newborn. There are a lot of choices, from CDs to government bonds to stocks. But a real estate investment might make the most sense. Put 20 percent down on a $125,000 house, and rent it. At current interest rates, your monthly payment would be about $950, including taxes and hazard insurance. If you can rent it for $1,000 a month, that gives you a cushion of $600 a year for maintenance and other contingencies-less than ideal, but acceptable.

Fast forward 18 years when your baby is heading off to school. You own the house free and clear, and by then you may be raking in about $1,500 a month, or $18,000 a year. After three years of that kind of income, even after expenses, upkeep and renovations, you could have taken back your initial investment. And the kicker is that your child has a home worth as much as $233,000 to sell, figuring a conservative appreciation rate of 5 percent a year. Or he or she can keep it and use the income to pay for college.

Of course, you could have purchased that certificate of deposit and made somewhere between $600 and $1,200 a year, depending on interest rates.

While Brester spends much of his time looking for and maintaining his investments, he sells general real estate as well. He has to make time for customers, along with his personal deals. So investing doesn't have to take up all your time, just some of your previously free time.

As he has become a more savvy investor, Brester has learned to concentrate on homes that need just cosmetic work, because that allows him to spend less money and turn it around quicker.

"I have shied away from extra work," Brester says. "I'm a better buyer now, because I'm understanding costs, expenditures and values better."

A handyman who can do his own repair work can make an even quicker buck.

Bob Sanders has concentrated his efforts on the area north of downtown for the last several years, finding rundown, old houses stuck in one of the most undervalued areas of the city. But with downtown expanding in three directions, those values also have risen.

"Some of the houses I have sold, I have doubled my money," Sanders says. "Of course, it's a lot more than that, because I probably only put down a few thousand dollars, so that's real good."

Sanders, 44, has made his living doing repair work, everything from roofs to painting to trim work. He started investing five years ago, when he saw the potential by noticing what some of his customers were doing. He started small, buying a $75,000 house back in 1999, when you could find a $75,000 house.

"The first one I bought, I had a little extra cash, and the seller held a second mortgage on the house. I had to put a little down, maybe two or three thousand bucks. I had to do a lot of work-sweat equity. I probably put $5,000 into it, kept it for about three years and sold it for $125,000."

Since then, Sanders has bought more than 20 investment houses. He currently owns 16. "All my money goes into my properties, basically," Sanders says.

One area of investing where Sanders admits he could do a better job is in managing tax liabilities. Even the best agents and investors can struggle with the nuances of the tax code, so a professional advisor is essential. Some investors use Limited Liability Companies, while others form more traditional "S" corporations. The benefits of each vary greatly, but almost any corporate structure can help ease the tax burden and insulate you from personal liability.

And because laws change often, it's difficult to keep up even once you know the rules.

Sanders said he plans to incorporate soon, but finding the right person to help is difficult for him. "I'm not real good at the paperwork end of it. It would be good to have someone to do it for me, but I don't trust a lot of people, either."

And Sanders, like many investors, has found that once he started, it sort of got into his blood. "This is about all I do full time now," Sanders says.

For those with more than a little cash, or where money is not an object, real estate investing targets a different level. Dozens of people have made small fortunes speculating on downtown condominiums in the last five years. But that was speculating, not investing. In most cases, they bought on the hopes that the market would shoot up, as it did. If you have a lot of money to invest in real estate, there are many more possibilities than for the small investor. The general difference is that it is on a larger scale, and you don't do the work yourself.

Even though waterfront prices are exorbitant, and the famous "West of the Trail" area seems built out, opportunities remain in both places. The purchase, however, likely will be in the hundreds of thousands, and the rehab thousands more. But the potential profits can be enticing, especially while interest rates are low.

If you're still a little queasy about putting your hard-earned dollars into dirt and mortar, an experienced partner can provide the essentials you lack. If you're willing to do the labor, a partner can provide the money. Many investors have plenty of money but no time to find properties. Joining forces can help both.

You can bet there are hundreds of real estate agents in Sarasota who start each day as I do, checking the Multiple Listing Service for new listings, or deals that fell through, or price changes that could indicate anxious sellers. Surprisingly, many "deals" are hiding in plain sight. Sometimes it just takes a low offer to the right seller, and an investment is born.

If you want to make extra money, if you have a little to spend, and if you find a good real estate agent who can help you find properties, there is still that last necessity for successful investing: nerve.

It's a common reply when I suggest an investment to a customer. "I don't want to be a landlord, dealing with broken toilets in the middle of the night." But if you look at it as a job, it's just like any other. There's the good with the bad. So you have to get rid of a few bad tenants to help secure your financial future-it's worth it in the end. And the hassles are never that bad.

Then again, there was that time a tenant left a turkey in the freezer, turned off the power and left without a word. 

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GETTING STARTED 

So, you're ready to go, and you want to start investing. Where to begin?

Not to sound self-serving, but I can only talk about what I know. And the best place to start is with a real estate agent-a good one, not that guy your aunt met at your cousin's party at Marina Jack last Christmas.

Ask people you trust for some referrals, then set up appointments to meet a couple of agents. Interview them, get references and find a level of comfort. Once you've chosen an agent, get serious and be honest. Your agent needs to know what your goals are, how much money you have, your credit history and anything else that might affect a purchase. Don't perpetuate the old saying among agents: Buyers are liars.

What real estate agents have to sell is knowledge, so take advantage of that. Even though there's a lot of information on the Web today about homes for sale, most of it's outdated and difficult to navigate. The only place to get a real "hot sheet" is from a member of the Multiple Listing Service-a membership that costs each realtor a hefty sum each year.

Be patient, and let your agent do his job. If you just can't stand sitting still, then focus your own search on areas that are ready to rebound. Anything near downtown, for instance, is a safe bet right now. If you plan to fix it up and flip it for a profit, make sure you know what nice homes are selling for in that neighborhood, then cross your fingers that your work estimate is close.

If you want to rent your property, you'll want to find a rental agent who can help you with rental rates. With the surge in home buying by investors recently, there's a glut of rental properties on the market. Anything priced more than $1,000 per month can be difficult, so beware. And when you figure cash flow and return on investment, be sure to include at least one month's vacancy, a substantial amount for repairs and a 10-percent management fee, even if you plan to manage it yourself. You don't want to find yourself short on cash if plans go awry due to repairs or vacancies.

Most of all, work hard at paying the lowest possible price. Another old saying still holds true: You make money when you buy property, not when you sell it.