The city of Aiea covers almost 11,000 acres, from Pearl Harbor northward to the Ewa Forest Reserve.

Up Aiea Heights Drive is 384-acre Keaiwa Heiau State Recreation Area and Aiea Hiking Trail, a serenely beautiful forested locale, carpeted with pine needles and dotted with lovely picnic areas.

This community of 32,000 started out as a sugar plantation town, and the presence of the Aiea Sugar Mill provided the hard-working people with a proud identity.

In 1998, following the demise of the sugar industry, the sugar mill was demolished, but the people prevailed. On 19.4 acres of the former sugar mill site, a new Town Center has risen like a phoenix from the ashes. Here, the people of Aiea are able to embrace their plantation past as they look forward to the future with renewed vigor.

Within both the city limits of Aiea and Pearl City are all of the amenities one would want in a hometown. The comfortable and attractive homes are generally in the moderate price range. The schools and churches are sources of community pride. The area offers public libraries, recreation centers, lovely parks, ball fields, medical centers and dental services, and, if anything, an overabundance of places to shop.

Pearlridge Center, which lies between Kamehameha Highway and Moanalua Road, is a mammoth air-conditioned shopping complex built in two sections and linked by a monorail.

The history of Pearl City differs from Aiea in that it was settled by independent farmers and fishermen. Some raised watercress, rice, taro and lotus in the wetlands and grew pineapple and sugar cane on the hillsides.

Others made their living by harvesting the plentiful fish and crabs from the unpolluted waters. Pearl City got its name from the oysters containing pearls that were discovered in Pearl River.

The introduction of cattle ranching in the uplands in 1840 stripped the land of its vegetation, washing soil into the lagoons, wiping out the oyster population. Later, Pearl River was dredged to form Pearl Harbor.

Pearl Peninsula, which jutted out into Pearl Harbor's Middle and East Lochs, was where wealthy people built elaborate mansions, whiling away their weekends and summers picnicking and watching yacht races with scores of their friends.

The bombing of Pearl Harbor on December 7, 1941, changed things. Pearl Peninsula and its environs became the property of the military, and Pearl City began its forward march to becoming the full-fledged community of almost 47,000 people that it is today.

Weighing the risks of investment properties

Often investors are attracted to the real estate market because it seems like a sure thing. In the past quarter-century, average home prices in the U.S. have climbed almost every year.

But most people have enough difficulty carrying just one mortgage. Is it really possible for the average Joe or Josephine to finance a real estate investment?

There are many strategies for investing in real estate. Some, such as buying land and building new houses, apartments and commercial buildings, are the domain of developers. But you don't have to have deep pockets to buy a second home as an investment.

As with so many things, success at investing in real estate depends on doing your homework. Bookstore shelves are full of how-to guides for the novice. Whatever your method of educating and preparing yourself to invest, you need to learn how to locate a property, inspect it to make sure it isn't a money pit, run the numbers to see whether rental income will cover your carrying costs, secure financing, negotiate a deal and close the transaction.

A common strategy involves buying a house and renting it out while it grows in value. Sounds easy, right? This can be an effective way to invest in real estate: you buy the property, sit back and watch it appreciate while someone else's rent checks pay the mortgage, taxes and maintenance. But be prepared for the headaches of being a landlord. You'll have to cope with plumbing emergencies and the like, as well as general upkeep, or pay someone else to do it. You'll also have to deal with tenants who are tardy with the rent, make noise, upset neighbors and abuse the property.

And you must ensure that the investment will be a paying proposition. A rule of thumb is that you'll need to charge 10 to 15 percent of the value of the property in rent each year to cover management costs. Remember that landlords can usually deduct management costs, taxes and mortgage interest from their tax bill. Consult your tax advisor to find out the details of tax treatment.

Another strategy is buying and flipping. It's every handyman's dream: you purchase a neglected house in a good neighborhood, put a few thousand dollars into renovations, and sell it a few months later at a profit.

This can be a successful strategy for those who are good at estimating renovation costs as well as handy with a hammer and nails. To come out ahead, you'll also need business smarts, or you'll have to hire some.

On the business side, weighing out the risks is an essential part of any plan. While real estate has proven to be a reliable investment, there are risks attached to both of these strategies. If you are buying and holding a rental property, a slump in the local rental market could force you to reduce the rent to a level that isn't profitable, or leave you tenant-less for a period of time. If you are renovating and flipping, local layoffs or a sudden hike in interest rates could make your fixer-upper hard to resell and force you into the role of landlord in order to offset your carrying costs for the property.

And don't forget financing. With either of these strategies, you've got to arrange financing at the lowest possible interest rate to maximize your profit. That means timing your investment to coincide with low market rates and shopping around to get the best mortgage deal available.

If you are planning to buy and hold a rental property, you can consider a long-term adjustable rate mortgage (ARM) or a traditional fixed rate loan. If you are going to renovate and flip a property, you are probably better off choosing a one-year or two-year ARM to take advantage of the very low initial interest rates currently available for these products.

Save cash by comparing loan fees

If you are thinking about buying real estate, you are thinking about finding a lender. It's best to approach shopping for a loan just like you would approach shopping for a car or groceries - compare prices.

When comparing lenders, it's most important to understand what your loan is going to cost you. A thorough cost comparison of the lenders fees may save you a substantial amount of money.

Your lender is required by the federal Real Estate Settlement Procedures Act to provide you with a good faith estimate of the fees due at closing within three days of applying for a loan.

These mortgage fees, also called settlement costs, cover every expense associated with your home loan including inspections, title insurance, taxes and an appraisal.

Because closing costs typically amount to between 3 and 5 percent of the sales price, it is best to wait until you receive the "good faith estimate" before signing any loan.

A good faith estimate is a standardized government HUD-1 form that itemizes all the fees associated with getting a mortgage and will spell out exactly what you can expect to pay for on closing day.

Smart shoppers will obtain a written good faith estimate from several lenders - at least three - to compare their costs. Soon you will have enough estimates to have a good idea what the costs of your loan should be and it won't be difficult to pick the best deal. Then ask their chosen lender to meet or beat the competition's best offer.

Many closing costs are standard and won't vary much from lender to lender - appraisals, credit reports, title insurance, and recording fees, for example.

Others, however, may be eliminated simply by opting out of a service, such as overnight delivery of documents. If fees seem vague or questionable, ask.

Remember, you can always negotiate with the seller to have them split or pay outright some of the closing costs, points or fees.

Back-to-basics: Mortage terms

Choosing the best mortgage for you and your family can often depend on income, credit history and other factors. It's probably best to talk with a professional loan officer who can help you determine which loan package best suits your needs. But it always helps to know some basic options and what distinguishes each program from another. Here are some definitions:

Adjustable-Rate Mortgage

A loan subject to periodic changes in the interest rate, according to an index spelled out in loan documents. Also known by its initials, ARM, and as a variable rate loan.

Advantage: Has an introductory rate often a point or two lower than a traditional fixed-rate mortgage.

Disadvantage: Rate can increase as often as every six months, depending on the terms in your contract.

Balloon Mortgage

A loan that typically offers low rates for an initial period, usually five, seven or 10 years. After that period elapses, the balance is due or the borrower must refinance at prevailing interest rates.

Advantage: Offers low-cost way to become a property owner if you plan to sell before the balance is due.

Disadvantage: When the balance is due, the borrower either must sell or refinance at present rates.

Fixed-Rate Mortgage

A loan in which the interest rate remains the same throughout the life of the loan.

Advantage: Makes it easy to budget.

Disadvantage: Interest rate is a little higher than ARMs, giving the buyer slightly less buying power.

Interest-Only Loan

A mortgage with an option to pay interest only for a specified time. The remaining years on the loan require both interest and principal payments, making payments higher in the future.

Advantage: Defers higher payments until later in the life of the loan when the borrower expects, through raises or fewer expenses, to be better able to pay it. Also allows a low-cost way to become a property owner.

Disadvantage: In the early years of the loan, a borrower will not gain equity in his property, except for any increases in market value. HS