Safeguarding Your Realty Investment; Keep An Eye On Bubble; Avoid underestimating costs in figuring out if property is affordable.(FUNDS & PERSONAL FINANCE)

Byline: PAUL KATZEFF

Investment real estate is hot.

So hot that the National Association of Realtors felt compelled to start measuring it last year. It found 23% of homes were bought by investors, rather than people shopping for a primary or vacation home.

Investors have flocked to property in hopes of topping returns they can get from stocks, bonds and funds.

Some analysts say that nationally, demand for houses will continue to outstrip supply, keeping upward pressure on prices. But buyers must beware of a housing bubble.

"In some pockets of the U.S., speculation is causing unsustainable price appreciation," said Gibran Nicholas, president of Nicholas & Co., an Ann Arbor, Mich., mortgage broker. "Try to protect yourself by having a realistic business plan. That's something you should have even if a real estate bubble isn't a threat."

A key part of such a plan is projecting your rate of return.