We seriously considered buying a 2-4 unit rental. Our criteria was as follows:

* Less than 30 minute drive from our house. Since we would be doing maintenance and management ourselves it needed to be local.
* It needed to cashflow with a 25% downpayment. In other words – the rent needed to cover the mortgage of 75% of the purchase price, taxes, insurance, maintenance. We were not interested in making up for cash flow deficiencies on appreciation when we sold. I can’t predict when we’ll come out of this housing correction and get bubblicious again. So I didn’t want to factor appreciation in.

We found several short sales that were listed that penciled out. But all of them were bid to higher than the amount that penciled.

I’m still monitoring trustee sales – with a “what if” mindset. Very few trustee sales of 2-4 units have penciled out in the areas we’re looking at.

We’ve done the long distance landlord thing – we kept my husbands home from before we met as a rental for several years after we moved to CA. It’s a total PITA to be an absentee landlord – even with a management company.