How do I "start in my own backyard?"

[N/A N/A]

I have been keeping an eye on the local housing market around here (from a consumers perspective, somewhere I might want to live) but I am not sure how to begin. I want to buy a small house/townhome and fix it up while I live in it a few years. From there I hope to sell the house and take that equity and keep the momentum going.

What key factors of my local real estate market must I pay attention to in order to turn a (large) profit over the next few years?