While it's a good idea in the "city", it rarely works in the suburbs. One reason that comes to mind is coding. Most people, once aware that their neighbor next door has a rental, will complain to the city. All kinds of violations often pop up with these arrangements. If the property is not built from the ground up to be a multiple tenant property, you could be looking at a LOT of potential headaches with renting it out. Insurance, for example might not be available. Lawsuits, considering the US is heaven for lawyers, etc. But, the OP is right in wondering why people are letting their property be foreclosed. The main reason is they were all greedy & OVERPAID like hell to the point where most houses made little economic sense as investments. It was really all speculation. As a result, many of these houses being foreclosed, if rented out bring in enough to pay only 30-40% of the original sales price.
True about the rental and HOA/Insurance issues. My Mom has to move out, for health reasons, and we asked the HOA, can only have 1 new tenant per year. Also prop. management company wants her to carry 1mil liability and name added to policy. I am not surprised it's in CA. FWIW it's probably similar in most major metro areas in US. Did any of you see the news segment last week on foreclosures in Moreno Valley, CA ( Riverside ). Not the greatest area but so many forclosures investors are buying from 45k putting in 30k in upgrades and renting for $1200 a month. I can't believe some of the price in So Cal. I really believe they overshot. Some decent homes in Costa Mesa are 400k, that's not much more than the part of Denver Metro I live in.
They're not "bargains" if California is going to eventually sink into the ocean because of it's government troubles.
I really don't see that happening. I am more cynical than most, but it doesn't change the fact that So Cal is the 10th largest economy in the world. Enough ppl got f*cked on those IOU's when I was there that the put pressure on Arnold to do something and he did. But hey I agree things are bad. I couldn't go shopping there without someone begging for money, most wearing nice clothes, LOL.