Shoshi, who is in her late 30s and works in financial marketing, was a long-time player in the stock market who decided to switch her investment focus.

"The days when it was possible to reach 6% to 7% annual returns are over," she says. "My brother buys, renovates and resells homes, so I decided to buy an investment apartment in Haifa from him for NIS 350,000." What about the risk of difficult tenants and long trips north to the unfamiliar city? "I have a tenant there now and it seems everything will turn out all right. But even if the apartment stands empty several months, where else would I make such returns?" she replies.

Although she headed into this scheme without much preparation and without even checking the area, Shoshi says: "I trust my brother implicitly and wasn't thinking of traveling there. I only decided to go see the place before buying on my mother's insistence." She recently completed the purchase and is content when hearing the most recent figures that show prices in Haifa are continuing to rise.

Shoshi is just one of the new players who's joining the real estate scene. In many cases these newcomers have no prior experience but were told by acquaintances about potential profits to be made, and decided to put their savings into a small, cheap apartment in the periphery. They were prompted to do this in many cases because of the microscopic returns earned these days at the bank and the current instability of the stock market.

Almost 25% of real estate transactions are defined as investment-motivated. The trend has been gathering momentum for several months but still hasn't returned to where it was two years ago when one deal in every three was for investment. With the market's recent recovery, investors too have been making a comeback. The Finance Ministry's canceling of some restrictions vis-a-vis property investments, the dropping interest rate and the stock market uncertainty - all are helping to make real estate investment relatively attractive again.

But investing can't be done without risks. There are, of course, troublesome tenants or difficulties finding renters. In addition, after the sharp climb in housing prices the past few years, the chances to profit from prices that will rise even further are slight. The returns, calculated by rent as a percentage of the price of the home, also need to take into account expenses like insurance, renovations and, of course, the various unquantifiable headaches involved in such transactions - not to mention interest paid on the mortgage.

The Bank of Israel is worried about this trend in general since unsophisticated investors add to the risk of an expanding bubble. If current real estate market optimism is overtaken by an economic or security crisis, the mood could suddenly shift and prices might begin falling. Apartments in the periphery that have been flocked to by investors would be expected to be hit first and hardest.

Are all the novice property investors aware of the hazards? Not for certain. Here are several stories taken from recent homebuyers, most with no prior experience in this field. The thing they seem to all have in common is an unwillingness to come forward openly, and identify themselves. "What I am doing is all legal, but I don't want the tax authorities getting on my case for nothing," says one.

From stocks to real estate

Without real prior planning Uri, who's 40-something, became a real estate man less than two years ago after closing the private medical business where he worked for over 20 years. First he became a day trader in the stock market but quickly moved along to property investing, too.

"I was fed up always being surrounded by four walls and wanted a change," he says. "I have a friend who started buying up apartments in Haifa after the Second Lebanon War at ridiculous prices of NIS 100,000 to NIS 150,000 - and selling them at a profit. I suggested going in with him on buying and restoring dilapidated homes and reselling them, and that's how we got rolling.

"Haifa is a state of its own when it comes to prices," explains Uri. "We buy apartments at NIS 250,000 and restore them for about NIS 30,000 with a renovator working alongside us who gives us good prices. Most of our work is in Neveh Paz and Neveh Yosef. We sell the units, usually to investors, for around NIS 350,000. The returns in these areas reach upwards of 5.5%. We don't hold onto more than two homes at a time because we don't use mortgages and don't want to take chances getting stuck. Our quickest sale was three weeks after putting the home on the market."

How does he locate cheap properties? "We maintain contacts with brokers and lawyers," says Uri. "The best homes for us are those in the worst condition. We're usually talking about places that were passed along in inheritance and have long been vacant, and which the heirs want to get rid of without realizing they can do much better by renovating on their own.

"I already start thinking about the next apartment before selling the previous one," he continues. "But there are risks. Homes are sometimes listed as a store rooms in the property registry (Tabu ), and these are hard to sell."

Their appetites for such business transactions have grown, but it's hard to know what the future has in store for Uri and his partner. "We don't go anywhere except Haifa," he summarizes. "It's not like buying an apartment in northern Tel Aviv for NIS 2 million. I buy below market and, even if prices drop, there isn't much room to go down. Unlike the stock market, you can't lose everything. I don't know how much longer I'll be doing this, but as long as I keep making money there's no reason not to continue."

Some relatively new investors find dabbling in real estate exciting. "Housing is something tangible," says Ayala, 45, who lives in a rented dwelling with her spouse in central Israel. "The bank suggested I invest in bonds at a 3% return but it's not something you can feel in your hand - and with real estate you can make 5%.

"I wasn't familiar with this field: A close friend explained it to me and I was captivated," she continues. "I got into an investment in Bat Yam thanks to this friend. A year and a half ago I bought an apartment there for NIS 700,000 without a mortgage and had no problem renting it out. I live where I want to live, and the rent earned there helps pay part of my own rent. From my point of view it's less risky than for those people who take out large mortgages."

After buying her first investment property, Ayala's appetite was whetted: "I also bought property in the United States shortly afterward, and I'm now hunting for an additional apartment. The search for the next place and calculating how to maximize my profit is exciting. I'm aware of the dangers - but 'nothing ventured, nothing gained.'"

Drunks in the yard

There are also those who claim to have bought a property "by accident." Tzachi, 40, a musician who plays in an orchestra, from Hadera, bought a second investment home in Haifa about two weeks ago, four years after making his first such investment; for her part, his wife is trying to cool his enthusiasm for making any more purchases.

"She keeps looking for reasons not to buy," he says. "She didn't even want to see the first apartment I bought.

"I used to think you needed to be a millionaire to buy property," recalls Tzachi. "By chance I passed by a realty office and saw an ad for a 50-square-meter apartment in Hadera's slums for NIS 170,000. I asked myself how much further it could fall. I renovated the apartment myself and rent it out at a 12% return. The apartment is now easily worth NIS 320,000.

"The second apartment I also bought by chance," he continues. "Taking a wrong turn on the way to a concert, I spotted a 'for sale' sign in Haifa's Neve David neighborhood, right near the beach. The price was NIS 350,000 and I expect it to jump in the next 10 to 15 years.

"In my opinion, real estate prices could waver somewhat but I believe they'll gradually rise," explains Tzachi. "I took a 70% mortgage on the home I just bought, which I pay off using the rental income. I easily found a tenant through an ad I placed even before I closed the deal, giving me added confidence. Even if the apartment is vacant, at worst I'll stand to lose several months rent - but with just NIS 220 a month in municipal tax it wouldn't be too bad."

Investment homes serve some people like a pension plan. Amir Cohen, a sales agent at Y.H. Dimri Construction and Development, says he runs into quite a number of pensioners who use their retirement funds to invest in apartments: "These people are usually more careful in their judgment, and will buy an apartment for, say, NIS 1 million with a NIS 400,000 mortgage. They usually look for a 4% to 5% annual return in areas like Ashkelon or Be'er Sheva. Today you see less of the investors common in previous years - those who counted on climbing values who would also buy more expensive homes."

"I bought four apartments in Bat Yam over the past 20 years," says Eitan, a cab driver and an "old hat" in the real estate game. "The values of all them doubled, except of course for the last one which I bought a year ago. This is my plan for retirement. Even if prices decline it won't affect me because I can live off the rent."

Itzik Duev, an Anglo-Saxon realty brokerage chain franchise holder in Be'er Sheva, tells about the great interest in the city among ultra-Orthodox entering the real estate market, even if they haven't much understanding of the ins and outs: "There are young couples in this sector who still aren't in need of an apartment at this stage, so they take the wedding money given by their parents - usually NIS 150,000 to NIS 200,000 - plus a mortgage, and buy one for investment. They look on it as something for the long term."

Duev also says investors who sold homes they owned, taking advantage of the tax incentives offered to sellers by the treasury, have now been returning to reinvest. One, according to Duev, recently bought three apartments in the southern city.

But not all the stories have a happy end. Duev tells about someone who bought two adjoining apartments for NIS 500,000 through an ad placed on the Internet.

"The buyer, a young man from Jerusalem, was told the location is popular with students but, in fact, it is home to an underprivileged population and drunks had taken over the yard," says Duev. "After not succeeding to rent out the property, he spent four months trying to sell it for NIS 550,000 and is now selling at a loss of tens of thousands of shekels."