Many neighborhoods in the country that may not have been favorable place to live in the past are now on the rebound. Low inventory combined with a lack of new-home building has convinced many buyers that these up-and-coming areas are a good place to make an investment in real estate. The RealtyTrac (now an ATTOM Data Solutions company) staff found the 35 best "down-and-out" neighborhoods to buy a home now, based on an analysis of 3,561 U.S. zip codes.

East St. Louis, made famous in the 1940s Academy Award winning film, Going My Way, was little more than a burned out, boarded up and dangerous outpost of vice in the 1980s. Now it's the best neighborhood in which to invest, per this analysis. The city has seen a 300% increase in construction loans. But buyers can make a six-figure flipping profit in Baltimore, Md. (No. 2), and Plainfield, N.J. (at No. 5, wracked by riots in the mid-'60s), in the top five. Charlotte, N.C. (No. 3), and Jacksonville, Fla. (No. 4), were also hot spots.

“The underperforming school scores and inflated rates of underwater homes in these markets demonstrates they are lagging the housing recovery seen across much of the rest of the nation,” said Daren Blomquist, senior vice president ATTOM Data Solutions. “But it is clearly evident from this data that many individuals and institutions are betting on these hyperlocal housing markets to still bounce back. Home flipping returns are substantially above the national average, indicating strong buyer demand for fixed-up homes; construction loans are increasing, indicating increased development often at a large scale; and the share of millennial population is increasing, indicating that the pool of new renters and homebuyers is growing.”

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