You can also try short sales as well as I have seen some of them that are being sold within this price range
I would focus on single family homes in the Fair Oaks area of Redwood City, more specifically in the Avenues of that area. As you know, the $300's are gone unless you're buying on the county court steps but there are some low $400's still available. With the new Stanford Medical complex by US101 in that area making rentals tough to come by at any price not to mention the expansion of Silicon Valley coming north. I would canvas that area for REO's. Be diligent, something will come up!
If you have a client that needs help in this area give me a call, I work with referrals all the time.
Always the best,
Hope that helps.
Visit http://www.Rentometer.com and you'll get an idea what are rents in your specif area of interest.
This will help you decide where to invest...
If you are looking for good rentals, I would say SSF, San Bruno and San Mateo. Prior to 2007, it was very difficult or next to impossible to purchase a SFH on the Peninsula and be able to rent it out for your mortgage payment.
With declining values coupled with the low cost of money, there are some good oportunities out there.