Foreclosures in bad neighborhoods that are in rough shape that go up for auction, where there aren't many bidders.
The unmentioned parts are that (1) fixing these places up costs money on top and you probably can't afford to hire contractors, so this is basically a second job and (2) the renters you get at the low end are terrible, and also require a lot of time and effort. It's not just invest and forget here.
and where there are many bidders, there are likely people who do this for a living and know exactly how much the house is worth, how much it will cost them to fix it, how much they can rent it for etc. AND they have the professional network in place for all of that-- relationships with contractors, etc
as another poster pointed out, it essentially becomes a job. and you will be competing with people who do this as their full-time job, who will likely have more experience and better connections than you.
The unmentioned parts are that (1) fixing these places up costs money on top and you probably can't afford to hire contractors, so this is basically a second job and (2) the renters you get at the low end are terrible, and also require a lot of time and effort. It's not just invest and forget here.