I have several investors active in the REO foereclosure market in San Mateo County.
I am finding my investors property in East Palo Alto, east Menlo Park, and east Redwood City that can be purchased with 20% to 25% and provide a small positive cash flow.
Being able to find properties on the Peninsula which will cash flow with 20% to 25% down was unheard of 3 or 4 years ago.
Most of these REOs can now be purchased for about 1/2 of what they sold for 3 to 5 years ago.
I agree there is a good chance for future appreciation.
And property values do not need to return to the PEAK in order for these properties to be good investments.
Of course, most of these properties will not be in good condition and most of the tenants for these properties may have credit issues or be on the Section 8 HUD housing program.
So you will need to prepared to actively manage these properties or hire a professional to do the same.
You can go to my website for a up-to-date list of foreclosures.