I've also considered investing in a more stable market (Kansas City seems to come up a lot on the forums), not an appreciation bet, but seems to be steady cashflow and you could land a couple multi's out there on good mortgages with that equity spread between as down payments, and a pad for rehab/capex.  

None of my properties do, and the capital tied up in them continues to perform just fine.That said, it's more difficult to find a property locally where the free cash flow is better than, say, the dividend income thrown off by investing in a Blue Chip dividend mutual fund.If you're looking at small Multifamily properties locally and want a first pass "rule," I suggest using a GRM target of 12-14 as a first screen, assuming you're looking for a property that will throw off free cash flow with a 70% leveraged mortgage.If you want to more than basic long term buy it and hold it, you can do it.  

I stumbled across a parcel of land that seemed to have potential, and I performed the requisite preliminary market demand and economic feasibility analysis.

You can also not bet surely on appreciation where the home increases value.

As I said, still a newbie but that's what seems like a possibility.I'm not sure exactly what you're referring to, Laniece, but I bet Chris Mason can give you a well-informed response.

From the sounds of it I bet there are other things wrong too.

You would first have to distinguish between performing and non-performing notes.  

I'd bet that a google search would find out if the same were true in CA.

Is it possible to buy a Bay Area house in this market and have it perform well as an investment?

If you don't bring money to a partnership then you need to bring the time.Time is putting it together, dealing with the problems, and performing all of the management tasks.