Here is my experience in Stockton (California) area,
* start buying properties since Jan 2009, so far acquired total 8 properties. These properties are all 5 to 10 years old, around 1900 sqft. Average cost about 140K (includning cost to fix before rently).
* rent for about $1350/month
* so far I had one nasty eviction (mainly because of my Chinese property manager who is a PKU graduate, which I fired late on), otherwise I think it is OK. A few tenants are really good, never late in payment. Two of them occationally late, but eventually always pay. Also had only one turn over so far.
* I used HELOC and equity from my main residence (about 800K total) for the seed money, then refinance from these properties (so far refinanced only 3). For all these debt, average interest rate is about 4% (main residence 30 year, investment properties 15 year and HELOC variable rate, but currently at 2.24%).
* Property tax in Stockton area is about 2%, property management cost is 6~8% of the rent.
so, assume rent is 1% of the property value ($1350/140K), and you get 11 months of rent each year, and the cost is the following: 4% interest, 2% property tax, 2% property management and maintenance, you still have a profit of 3 months rent. My experience so far seems to be better than this.
Seems like this is a do-able time for investment properties even in those so called bad areas like Stockton.