Creating purely invented characters is similar to basing characters on strangers. With strangers, a small glimpse into another life sparks the imagination. Made-up characters, too, usually begin with the spark of an idea. The writer then fans the spark into a full-blown person.
Characters usually present themselves encased in at least the rudiments of a fictional situation. Caddy is up in a tree (why?). The deceased lady has left $6 million to an animal hospital. You have something here to work with. Your next task is to look hard at this character/situation in order to decide if the character is strong enough to sustain a story.