To those who think the high-priced housing market in many areas of the country has dried up any good real estate investment opportunities, one Riverside, Calif., man simply points to the $80,000 profit he and his brother made in the past year from just one foreclosure property investment.

"Everyone thinks the California market is overpriced or it’s peaked, but there are areas where there are buys," said Dave, who asked that just his first name be used. "What I did was buy a parcel where there were three acres with a small house on it. I sold it to an individual who is going to divide up the property into six lots and put utilities on it and sell off the four properties (that he doesn’t keep for himself) to other people.

"We resold basically about a year later," he continued. "And it worked out, by the time everything was done, to about $80,000 in profit."

Dave found the property through RealtyTrac, which he joined so that he could locate pre-foreclosure and foreclosure investment opportunities in his area. The property was bank-owned — also known as Real Estate Owned by the lender (REO) — which means it had gone through the foreclosure process and was repossessed by the foreclosing bank. He initially called the bank about another property he saw on RealtyTrac, establishing a good relationship with the bank’s REO department in the process. When the property he called about didn’t work out, he ended up buying another REO property from the same bank.

"Basically it (RealtyTrac) connected me with a bank that had properties available in the area," he said, noting that the bank was based in Texas and didn’t know much about the property other than that it was sitting on the bank’s books and not generating any revenue — also known as a nonperforming asset. "Actually having those out-of-state banks is a huge advantage because ... all they have is a file folder there saying, look, get rid of this."

Even though the house on the property was in poor condition, Dave knew the land had great potential because it was in an area with a lot of growth and demand for housing.

"The house that was on it was basically junk. I wasn’t buying it for that, I was buying it for the available property. And there’s a lot of that still available out in the Riverside area," he said. "After it was done (purchased), we basically just put a for-sale sign up. And a guy called and made an offer."

Dave said he’s using part of the profits from the sale to make improvements to his personal residence, but he plans to return to foreclosure investing in the near future.

"I think in the next three to five years there will be a bunch of stuff that it will be good to invest in," he said, adding that he thinks bank-owned properties are the best investment opportunity for him because they provide a more straightforward path to purchase.

"Once the bank already owns it, transfer of title is a lot easier than when someone is living in the property," he said. "Just deal with the bank, they’ve already got the paperwork. It’s wam-bam, it’s yours.

"You can make more money on the pre-foreclosure type, but I’m the more conservative type. Easy in, easy out. That’s why I look more toward the bank-owned stuff."

Still, it took persistence and experience knowing what to say and how to say it for Dave to get through to the representative at the bank who was in charge of the file for the property. When calling about a bank-owned property, Dave recommends asking for "the person in charge of making a decision on this property for a qualified buyer." Of course that means prospective buyers should be pre-qualified for a loan before they call.

To get the best deal on a bank-owned property, it’s important to deal directly with the bank before the property is listed for sale with a real estate agent, when it probably will be listed at full market value.

"If they say bank-owned, but they’re going through a real estate agent, then it’s the same thing as just driving by (a listed property) and dealing with a real estate agent," Dave said.

While he does believe there are great investment opportunities still available, even in high-priced markets, Dave said investors should be careful to "do their homework" when buying a foreclosure property.

"You want to make sure there are no liens against the property," he said. "Make sure there are no tenants in the house. Make sure a property you are negotiating on is free and clear and is available."

Much of this homework can be accomplished online, thanks to an extensive Lien & Loan History report, Comparable Sales report and Estimated Market Value available to RealtyTrac subscribers for hundreds of thousands of U.S. properties.

"It’s a good vehicle to get (property) information or educate (yourself) in the areas you’re looking," Dave said.