If you are looking at buying REO properties for investment, the first thing you need to know is that you need to know more than everyone else! There are many things you’ll need to know, but you need to be the most knowledgeable one. 
Know the neighborhood well where you’re considering buying a REO property. You should buy in inexpensive neighborhoods but in an area that buyers will feel safe and where the residents will be credit worthy. You want an affordable area so that potential buyers will be able to qualify for a loan. If you choose nicer neighborhoods with higher priced homes, the number of foreclosures could be higher and there will be too much competition between buyers.  This can get you into a bidding war and you end up paying more than you planned.
You also will want the neighborhood to be mostly owner occupied. The neighborhood where families have lived there for years as their children grew up and finished school. However the less desirable neighborhoods that are lower priced could be owned mostly by landlords and this won’t be attractive to potential buyers that are planning on staying while their children finish school. Close to schools and parks are always good selling features.
Know the value of the properties in the neighborhood. While shopping a neighborhood, do your homework with a realtor. Ask for a market analysis. You want to know how many homes have sold in the last 60 days and how long they were on the market. How many houses are on the market currently and how long have they been listed? Find the asking price for all and the price they sold for as well. When the houses that are up for sale currently hold an open-house, take a tour.
Learn and know the cost of repairs! Don’t back away from a REO property because there are repairs needed that other buyers fear. You should get an inspection done on the property you have selected. Then use the internet to find the estimated cost of repairs. Use of the internet will be your best friend. Remember cosmetic repairs are the inexpensive ones. A gallon of paint can do wonders, but not if the wall behind it is full of mold or termites. 
Create a formula and know what you can realistically sell this property for when it’s ready. This is a crucial step because this is where you make money, break even or lose money. After you finished the repairs and you’re ready to put it on the market. You are the one that knows how much you have put into the property and where to price the home so that it will sell and you make a profit. Give yourself a formula that accounts for the purchase price, the cost of repairs you’ve done the cost of real estate commission, taxes and fees and aim for a minimum10% profit.