Brad Coleman (Vice-President Metro Estates Newport Beach, Ca.) has the outlook/forecast on 2011/2012 

Distressed properties made up a large portion of the sales in 2011, and this trend will continue in 2012 and beyond.  The banks have implemented more efficient systems for processing short sales, and prefer doing them over taking the properties back through foreclosure.  Bank owned (REO) sales were relatively low compared to previous years.  I expect this trend to continue as banks look to unload REO properties through bulk sales to large investors, and encourage short sales to struggling home owners.  Distressed properties and opportunities will remain a large part of the market for years. 

I am very excited for the 2012 residential income property market.  With low prices, low interest rates, and rising rents, properties are making sense to buy for many investors.  I have encouraged my clients to buy entry level single family homes, duplexes, and triplexes in good locations the second half of 2011 and some have seen great returns already.  I expect 2012 will be a great year to add some rental properties to your portfolio. 

My recommended real estate investment plan is conservative.  I recommend buying entry level properties since the demand is strong for starter homes, and this segment of the market has seen aggressive price reductions in recent years.  I recommend improving the properties after purchase with durable and neutral upgrades.  Putting $10K into starter properties now makes a huge difference in appearance and marketability.  Keep in mind if you rent property out in today’s market you can get good rents and cash flow, but you may need to overlook some credit dings from renters currently in the market.  A good agent will help protect you by finding the right tenants and terms for the lease.