I often remind clients that they need to calculate in sweat equity when purchasing distressed properties. Certainly you can "purchase equity" in the 20k to 50k range. But if the property takes 20k to get up to resale condition, then what is left is your sweat equity. In this market I am seeing HUD homes being bid up 10, 15 even $30,000. Here is a good article from WJS Online showing that the competition for foreclosures is rampant across the county.

Are Distressed Homes Worth It?

By M.P. MCQUEEN

Home buyers are finding that the battered real-estate market offers just as many opportunities for headaches as for bargains.

Seth and Crystal Grotzke, both 25 years old, recently bought a bank-owned two-bedroom, two-bathroom townhouse in Edina, Minn., for $110,000—when similar homes in the same development were selling for as much as $131,000. But exactly one day before the scheduled July closing, the Grotzkes learned there was a second, unpaid mortgage. Because of the foul-up, the couple was forced to live in Mr. Grotzke's boss's basement for more than a month. They finally closed on Aug. 31.

"We knew there would be title issues, but none that would last for that long," says Mr. Grotzke, an assistant pastor. He adds that buying a foreclosed property is a way for God to "teach you patience."

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