Eighteen months after Hurricane Katrina made landfall, New Orleans remains mired in more red tape than rubble.

And according to one real estate investor who recently toured the region that makes the town either a rehabber's heaven or a rehabber's hell.

The Brookings Institution's monthly Katrina Index for March is a grim reminder of Spartan conditions that continue to exist in the Gulf Region.

It says the flow of billions of federal dollars needed for basic repairs to essential infrastructure has stalled, largely because the community is having difficulties coming up with the required 10 percent matching funds for some 20,000 separate projects.

Brookings says waterways and drainage arteries remained clogged from St. Bernard to St. Tammany. Police and firemen continue to work out of FEMA trailers.

The Associated Press recently obtained documents that reveal the Army Corp of Engineers initially installed defective flood-control pumps and is now scurrying to overhaul them before the next hurricane seasons. The Corp insists the pumps would have worked fine in a hurricane. Luckily, the region remained relatively dry last hurricane season.

Brookings said while infrastructure repair indicators are stalled, some economic indicators are pointing to increasing employment, thanks to major rebuilding efforts about to get underway.

The New Orleans metropolitan area gained more than 50,000 workers from November to January. At the same time unemployment dropped from 5 percent to 4.5 percent and remained just below the national average, Brookings reported.

Also, housing indicators have been mixed but home prices have rebounded to pre-Katrina levels in virtually every parish except St. Bernard where they are priced at half the levels they sold for before the storm hit.

Inventories are up from 13,385 properties in February to 13,609 in March, primarily in the most flooded parts of the metro area.

On the ground, Jeff Klein, a Las Vegas real estate agent and vice president of development for the National Association of Residential Real Estate Investment Advisors, along with Gigi Burk, a New Orleans real estate broker and others recently toured the Crescent City.

They found:

• Land prices have plummeted (by as much as 50 percent in some areas) due to the destruction. However, construction prices have increased significantly, doubling in some cases due to the labor shortage. As a result, housing prices have appreciated since Katrina.

• There are only about two to three occupied homes per block in the hardest hit areas. The remaining homes were demolished or ready for demolition.

• More than 65 percent of New Orleans' properties are owned by investors, 35 percent by their residents.

• Local handymen have become rehabbers and out-of-town investors are bringing in their own rehabbing crews.

  "If a hands-on investor can assemble a crew and bring them down to New Orleans, he or she will make money hand-over-hammer for years to come (and still be able to party hard on Bourbon Street during the weekends). Plus, this is a win-win situation for the residents of New Orleans because they sorely need affordable housing to buy or rent," said Klein.

• Investors buying homes for $50,000 putting $25,000 worth of work, and selling the properties for $115,000. Big depreciation write offs of up to 50 percent are helping fund the work.

Klein warns, however, rehabbing in the Big Easy isn't easy.

"If you are not an investor with ties to a solid rehabbing crew of your own, then New Orleans real estate investment is a topsy-turvy world," he said.

The huge supply of homes for sale are largely damaged homes, rents are low, affordable housing is scarce and insurance costs have doubled all making cash flow hard to come by.

"If an investor were to purchase a home for under $100,000 and find the means to rehab it affordably, the investor has a chance of turning a nice profit over time, but finding the means to rehab is the biggest challenge," Klein said.

"If you decide to navigate the murky waters of New Orleans' real estate investment, make sure to have a savvy real estate professional by your side," he added.