How Are Things at Home Base?

Fitness pro and personal trainer Christopher Cuevas, 31, is building financial strength -- a key to his overall wellness, he says -- by investing in real estate. He recently converted his former home, a loft at Jack London Square on the Oakland, Cal., waterfront, to a rental. Then he bought a townhouse in nearby Walnut Creek for $525,000, which had been listed for $590,000. The buyers' market in California made it a steal, he says.

Cuevas will live in the 1,400-square-foot, two-bedroom house, improve it and put it on the market when selling makes sense. He looks forward to the time when his accumulated real estate gains will allow him to do whatever he wants.

Over the past five years, homeowners across the country enjoyed double-digit rates of real estate appreciation that left many feeling as if they were set for life. Creating wealth so effortlessly was like building muscles while relaxing on the couch.

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But now housing markets are slowing, with prices falling in many places and annual appreciation expected to come in below 3% nationally in 2006 and 2007. Sellers trying to cash out quickly often have to make serious concessions to hard-nosed buyers like Cuevas. If you've owned your home for some time and don't have to sell, you're probably in fine shape; the market will improve again. If you're buying, you'll find some attractive deals. But don't lock yourself in to an enormous mortgage that forces you to ignore other, more lucrative investments.

Follow these three tips to protect your equity:

• Save for a down payment. During the real estate boom, lenders relaxed their traditional lending guidelines. But if you have to borrow almost the entire amount, you risk an out-of-pocket loss if you have to sell.
• Borrow with discretion. There are only three good reasons to borrow against your home's equity, says financial planner Sheryl Garrett of the Garrett Planning Network: to repair or improve your property, to increase your (not your kids') earning power through education, and to handle emergencies.
• Cash out, move on. If you're tempted to take your profits, preserve your cash by moving a day's drive away from an expensive city or inland from the coast.