Buying a distressed property in a good neighborhood can be great deal. You can spend a lot less for a house than you might not typically be able to afford, and build equity as it increases in value. But not every dirt cheap distressed house is a great deal. Be careful about looking for homes in extremely depressed neighborhoods. If every house on the block is going into foreclosure, or if every condo in the high rise is vacant, you should look elsewhere [source: McCrea]. There's just no telling when the market in an area like that might bounce back -- or if it will ever bounce back. You could end up stuck in a vacant neighborhood, watching as your cheap house gets even cheaper. In the worst-case scenario, you could end up in the same shoes as the person you bought the house from: owing more money on your mortgage than your house is worth.