Some home buyers are intimidated by foreclosed and bank-owned homes because they often require more renovations — and a different type of negotiation — than other options on the market. However, some REO properties come at a significant discount and, if you’re willing to work through some of the nuances of the post-foreclosure market, you can set yourself up for a great deal.
If you can get the complete rundown and history of the property, it is work investing in. I have bought a few myself. They tend to take a lot of muscle to fix up but once you are done, you can turn over a pretty penny on them easily.
This is something I've seriously considered doing as well.
I think it'll definitely be a lot of work but if you bring the property up to scratch for a low cost, you can make a big profit.
I don't buy homes, I just work on getting them sold. I know that there are methods for working with foreclosed homes though that are promising. There is a book on Amazon, I can't remember the name, it might be useful for you. I'll try to find it again and link it here for you.
I have worked with two. One was won by a buyer who regretted it purchase. He essentially paid $27,000 for a home that needed over $140,000 worth of work done to the home, the land, and everything in between. I was able to get back his money and a little more. Sold it for $35,000 but it took along while.