You may see some higher cap rates but beware of the property or the tenants that inhabit that property.  

Another lawyer to fix a problem with this landlord isn't going to get you anywhere,, the only other option is to pay your rent to the court it is put in escrow, send owner notice to fix the problem, take photo's and call city for inspection of area of home that's not inhabitable, so basically the landlord can't kick you out as long as your rent is paid on time to court, he can get the rent once the problem is corrected from the court but then he and you still have to deal with living together yet apart and he's not going to extend an olive branch if he can cut the tree down and give you proper notice to vacate..MOVE now when you know what's up and good riddance to the problems

It is further agreed that in the event said Tenant, prior to the expiration of this Agreement, or any renewal thereof, vacate, abandon, or surrender the premises at any time during the tenancy then the Landlord will have the right to enter the premises by use of key or by force, if necessary, for the purpose of decorating or repairing said premises so that it may be put in habitable and proper condition for occupancy by a prospective or another Tenant, without being liable to prosecution therefore or damages by reason hereof and without relieving the Tenant of any obligations to pay the rent for said premises.This would be great, but he has a dog and I'm risking one of my team getting bit.

You can buy a foreclosed home using conventional financing as long as the home did not sell at auction and is in habitable condition since most lenders will not do a conventional loan on a run-down house that needs a full gut rehab. 

So even assuming that San Diego was inhabited by the top 5% US income only (median income at 160k), only 1% would be explained, Appreciation Effect 2 - mortgage affordability +2.7% since 2000, +3% since 1981Since 1981 to now mortgage rates have gone from 18% to 4%, this contributes an annual growth 3% per year to the mortgage can afford.

I'm following this conversation, looking to do something like this in Detroit except my plan involves a contractor willing to sleep in an inhabitable residence :) 

Each unit needs some TLC, but currently inhabited.

The reality is they almost always fix these things or discount them as the house could not be inhabitable without.Also opens a can of worms as far as where and how many breaks there are.

I believe you'd have to dump a bit of money into the sub 30k houses to make them inhabitable, unless you stumble on something that is somehow in decent condition.

I bought the property to initially live in, was unable to due to my job, then decided instead of paying for a property I'm not inhabiting, I might as well get someone else to pay the rent and build my equity.