Initially, it sounds a bit crass to capitalize on another’s misfortune. But in actuality, that is exactly what our economy needs to rebound from a recession. That is why the Federal government is trying so desperately to stimulate spending by lowering interest rates and preventing banks from going under.

From an investment standpoint, there is a flood of foreclosure properties on the market, and many banks are desperate to liquefy them. If you’re uncertain where to invest your money, real estate has always been a recommended avenue. So, what areas are best right now to pick up an investment property?

It’s probably wise not to think of your investment as a “quick flip.” Realistically speaking, the flood of houses on the market has to dissipate before values are going to recover. It will happen; it will just take a year or two. In the meantime, remodel your investment and rent it out. If you are a shrewd shopper, investigate the going rate for rent in advance, then purchase a home whose payment will be covered by the rent. Remodel your investment, rent it to cover the payment, then refinance and remove your equity to buy another investment. Financial advisors call this making your capital work for you.

What areas are best for investments right now? It is important to select an area that still has a strong infrastructure. Detroit, for example, has one of the highest rates of foreclosures in the country. However, that is a result of the auto factories leaving and a severe loss of jobs. Real estate values have plummeted, but they are going to take longer to recover than, say, an area such as Las Vegas. California has a very high foreclosure rate, with Sacramento being the hardest hit area. Because of this, the housing market is flooded with houses, and values have fallen drastically. In Sacramento, a home that cost $450,000 three years ago is now around $235,000.

California’s problems are a direct result of inflated and unaffordable housing prices. Many people got in over their heads by stretching their budgets just to become homeowners, only to lose their homes when rates rose. There hasn’t been a severe loss of jobs, and the overall economy is still booming. This means that home values will rise again along with the State’s population. The same situation exists in Florida, Arizona, and Nevada, making each of these places key investment areas.

Research each area carefully before making a purchase. Study population growth, job opportunities, and housing history. Then shop around, make low offers, and find a great deal. Remember, you can make offers to a bank as well. Not only will you be providing housing for someone who possibly lost their home, but you will be doing your part to stimulate the economy at the same time.

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