I actually work for a real estate investment company and we buy foreclosures and rehab them like crazy...We do 10/month at the minimum.
ALOT of investors are getting FILTHY ass rich this year..one of ours is 24 years old and will be a multimillionaire by 2009(total properties, cash, equity)..(kinda makes me ill but Oh well)
DEFINITELY look at foreclosures..check your local MLS where you will definitely find plenty of vacant bank owned homes.
Properties Owned by Countrywide - REO Homes
that's a biggie along with homesteps.com (freddiemac), fannie mae's site
Fannie Mae-Owned Property Search
and check out HUD homes
HUD Homes
which will get you in there for Nothing down.
Just make sure you know what you're getting in to and the repair/upgrade total.
It's easy to pay TOO much for a foreclosure AND/OR get one with Major Expensive Issues.
The Razmus Team - Real Estate Sales and Investments in Michigan