I live in California (own my home, free and clear) and would like to buy rental property -- perhaps a new tract home in Arizona or Idaho. I am mainly doing this for the appreciation value and the fact that you can no longer purchase a home in CA in the low $100's. I can put down the 10 - 20% down payment. I am not looking for vacation property.

Before getting in my car to do a road trip to both states to look at new developments; what should I be doing to prepare. Do I need to be pre-qualified for a loan; obtain my financing first, etc. I have good credit, no debt and a decent pension coming soon.

You should definately prequalify first with a mortgage company. It is difficult to make an offer on a house unless you have an approval letter in hand. The real estate market is such that even a 24 hour delay could mean the difference between getting the house and losing it to the next guy. Since you are purchasing a hamoe in another state as a rental, many inexperienced mortgage brokers will suggest that you finance the property as a second home as the rates are much better, and the story will be believable. I have to warn you however that this is highly illegal. The chances of getting caught are slim unless you default on the loan, and the consequences for the loan officer are negligible. The consequences for you however can be pretty severe.

Buying and renting realestate out of state is difficult to manage. I personally did it and turned out in the end to be a nightmare,however I live in CA and kept property in MO. If you are inexperienced with rental property I would say try and keep it close to home. The home values are much more expensive here but would be less of a headache and save in travel money if something goes wrong or renter just up an leaves you and then after 2 months of non-payment you discover they haven't lived there for 2 months. I am not sure what part in CA you live but I can offer some assistnace in giving you advice for cheaper areas in Southern CA. Also in terms of financing they have interest only loans that would allow you to get more bang for your buck. Email me if you would like to discuss. lotusraee@aol.com