Canada has some very interesting dynamics right now....definitely something to look into!
Notes- I work in a retirement area where there are a lot of investors/individuals who are at a place in life where they just do not want to deal with the hassles of renting, remodeling or developing.....so they become the "angels" (originating loans instead of buying existing ones) of the younger generation of area investors through private notes. It works great...the real estate is local, so there is a much greater level of comfort because they already know the market, are familiar with the area or neighborhood, and they have the ability to watch a project progress... Arizona also has a streamlined foreclosure process which only takes 90 days...and costs are usually only 1000-2000...., which makes recovery of an investment gone awry much easier to recover from. If you are investing in discount notes, know the state laws of foreclosure and lending...and give the area a through once over by cruising MLS listings in the area, but notes, whether you buy or originate them, would be a nice armchair investment occupation.
Tax liens...You need to check the property carefully and sometimes the interest rates at the auctions are bid so low, you may do better with a bank savings acct! Even though your chances of acquiring a property via a tax foreclosure are very slim...many times the land acquired has been deemed worthless or has some major issue (people sometimes get rid of "worthless land" by purposely letting it go to a tax sale). I have seen people acquire 12 ft strips, river bottoms and brownfields. but I have also seen people acquire a home for 1% of it's value and those who acquired worthless land for 150$ in back taxes...sell it for 12-20K 5-10 years later. But you will have to constantly buy new liens, because most of them will be redeemed long before they go to sale.
Whether or not foreclosures will make sense or not, depends on the market they are located in, but in my experience, they are more of a hands on investment in order to be profitable. This may not be the best option for you.
Hope that helps!