Investors purchased 23 percent of all homes nationwide last year.

All second-home purchases--investment properties, vacation houses and retirement homes--accounted for 36 percent of all home sales, and second homes now comprise 38 percent of the nation's entire existing housing stock, according to the National Association of Realtors' 2005 National Association of Realtors Profile of Second-Home Buyers, released earlier this month.

It's an investor's market, but experts are warning prospective second-home buyers not to be dazzled by the victories of speculators who take the riskier approach to investing by flipping properties--buying and quickly resellingwith an eye toward making a profit.

Real estate, always as part of a larger diverse investment portfolio, is typically a long-term investment, not an overnight sensation--despite the run-up in prices in recent years, says investor and personal finance counselor Eric Tyson, who, along with Robert S. Griswold, co-authored Real Estate Investing For Dummies (Wiley, $21.99).

Small-time property investors should buy properties to hold for appreciation, rental income or both, experts say--not for a fast buck.

With comments from other experts, here's what Tyson and Griswold offer as start-up tips for first-time second-home investors.

* Live within--or below--your means. You typically won't be able to tap investment returns right away, and in many markets you will pay some expenses (insurance, taxes, maintenance, upgrades, etc.) to own investment property even if you rent it out. Roll back your do-it-all lifestyle. Keep your current car a few years longer. Don't live in an expensive community loaded with amenities you'll never use. If you must travel, travel to the investment property and use visits for do-it-yourself tasks that cut costs on maintenance and upkeep.

* Put 20 percent to 25 percent down. Living frugally will give you the money you need for larger down payments, which give you the best financing terms and speedier returns on your money. You can buy a second home with nothing down, but smaller down payments come with more expensive interest rates, private mortgage insurance and other costs. While you should strive to use as much of the lenders' money as leverage to cover acquisition costs, too much leverage can be dangerous if the market turns on you and your debt expenses are too high to allow you to bail out without losing money.

* Check your credit. Get a free credit report from the Federal Trade Commission­sanctioned AnnualCreditReport.com. Check for accuracy and errors. Boost your score with the appropriate credit behavior.

* Pick a real estate team. Line up an investor-advisor, loan officer, tax specialist, attorney and others who can assist you. An investment smarts­heavy team of professionals in the location where you want to buy positions you to identify and quickly close on the best investment properties.

* Think small. Small residential properties, such as condos, townhomes and small homes, are easier to maintain and manage, and the initial capital investment is smaller, putting less money at risk. Consider larger detached homes, multiplexes and larger multi-housing units after you've mastered one or a few smaller properties.

"A property with a successful vacation rental history can actually fetch a higher price than its competition. That's because the new owner isn't buying just a building or a condo; he or she is buying a small business with a proven track record," said Alfred Glossbrenner, co-author of the book/CD How to Make Your Vacation Property Work for You!.

* Think location, location, value. Own property in up-and-coming areas with new development, the potential for growth and other factors that enhance finding and keeping good tenants. Properties that are in solid locations but in need of largely cosmetic deferred maintenance can be wise investments.

"There are some markets that are oversaturated with new development. Avoid them," said Christine Karpinski, investor and author of How To Rent Vacation Properties By Owner (Kinney Pollack Press, $26).

* Conversely, avoid "perfect" properties. Avoid new or fully renovated properties, unless they are in the path of progress or some prime location--say the first phase of an oceanfront community. First-phase pricing is often favorable because of the pressure on the developer to pre-sell some homes before his development loan kicks in. Otherwise new properties may have already been squeezed by the current owner and further rent or value increases may be limited.

* Buy nearby. Buy within two hours' travel time--by car, plane, train or boat, depending on how you travel. Proximity cuts down on travel time and allows you to travel there quickly when necessary, say to perform your own management. Seek more distant investments only after becoming familiar with the market--travel there on a regular basis for other reasons or find a property manager who won't cut deeply into your profit potential.

* Take the glow off cash flow. Don't take the seller's or agent's word for it when it comes to the income and expenses associated with the property. Work a cash flow report from scratch based on your or your team's research. Otherwise, you have no way of truly knowing the investment value of the property.

Real estate writer Broderick Perkins, executive editor of San Jose-based DeadlineNews.Com, writes regularly for this newspaper.