The guy didn't have the actual rents right--he mixed up current rents with "market" rents, which of course made the price way off base.I guess if you can hold on for long enough and/or drive the price down, it might be worth it, though with rising rental prices in the bay area, it would be hard if not impossible to get tenants to leave without some seriously huge incentives!

With yields as high as they now are; in theory many of them can be cut in half and still produce a solid return.I've began building a position earlier this month and will layer in slowly over the next few months if oil continues lower (I'm buying down to $40 oil if it gets there) with view of holding 3-5 years  and trimming on any aggressive pops.Interesting fact - From the data I've seen, the inflation adjusted average price of oil from 1946 to now is just shy of $41, surprising! 

So they are somewhat of a refuge against rising interest rates (admittedly rising rates keep some potential buyers out of the market, but there are extraordinary research studies that show, paradoxically, underlying house values often INCREASE during times of rising interest rates).   

Rising rents, good jobs and aging populations probably helped.

There are no sure signs that the market can sustain an increase in rates and inflation is not an issue.

Looks good to me - mostly just make sure the unit is in good condition (how old is the roof, etc) and make sure the rents haven't been inflated above market rates, and you're good to go.  

This helps you figure out if the advertised rent is appropriate or inflated.  

We recently closed a500ac REO for 10c/dollar (based off of inflated purchase price) and the buyer was able to get triple the acreage under budget. $1577/AC.

Rents not much more 20 years later and appreciation just keeping up with inflation.  

@Karen Margrave great read about rising from the ashes!