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That was our formula. We'd find an affluent neighborhood we like and then look for the "ugly duckling". So long as the foundation is solid, you can over time turn most homes into a showpiece. That's how I was able to move into a neighborhood with doctors and lawyers when I was barely 30 and making less than half of what they made.

First house I bought for $92,500 and sold two years later for $168,000. Then I bought a home for $262,000 and sold it a few years later for $479,000. It's amazing how much more a home will sell for in a nice neighborhood just by modernizing the kitchen (most expensive part of remodeling) with modern brand-name appliances; sanding and polishing hardwood floors and having fresh coats of neutral paint indoors and out.

Key is to have a good neighborhood. Drive around your prospective neighborhood on a Friday or Saturday night. Make sure no riff-raff is hanging around. You want to hear crickets, not police sirens at night. Make sure you are surrounded by prosperous people who work for a living. If you go downtown and see check cashing joints, early payday loans, and such, STAY AWAY, no matter how nice the house is. Unless you live in the desert and have no choice, look for wooded lots surrounding the properties. You don't want to have neighbors peering over their fence into your yard - and vice versa. Unless you really have a desire to live in the city, ensure at least a 2 acre lot around the house.

Also, if you use a realtor, be aware of their steering practices if you don't know the area. I recently purchased a home in Fairfield County, CT. It's one of the most affluent areas of the country but there are pockets of nasty areas such as Bridgeport and Danbury. There are some very nice homes in the outskirts of those areas and realtors are desperate to unload them on unsuspecting buyers because they've been sitting on the market for months - the locals know better. Early in the process, my wife and I were shown a home that was spectacular but we couldn't believe the price. It was less than half of what a similar home in the area would normally cost. Later that night we took a drive around the area and we immediately found out why. Unless we took a direct route to the interstate, we had to pass through some very seedy areas to get to where we wanted to go. Unacceptable.

If you are going to live in a suburban area outside a major city, you want to have at least a couple miles separation between your neighborhood and the "sketchier" parts of town. Ideally you would want to settle in a town that has no "sketchy" areas if you can afford to do so.

Good luck.