Robert, it really depends on the condition of the property - for example, most mortgages require you to have a working stove and hot water. I've seen many foreclosures where all the copper has been ripped out of the house, missing appliances, etc. It's very difficult to get conventional financing on those types of properties. You'll need to get a construction loan, which may be a more arduous process (the one I did was a nightmare). If you're going for traditional financing, really keep an eye on the condition of the property and work with an agent who can tell you whether or not you're going to even be able to get conventional financing on it. In addition to short sales and foreclosures, I'd probably suggest that you look at estate sales, as well. Typically, these homes are habitable, but are still in need of updating and are priced to reflect that.
Take a look at the blog I wrote regarding this: