The world of property can be harsh in the extreme, with one person’s misery being another one’s profit. Nowhere is this truer than in the land of laissez-faire economics the United States.

The collapse in house prices in many parts of America as a result of the credit crunch and recession provides an investment opportunity for cash-rich Britons unafraid of risk and without moral qualms. Property buyers are taking on repossessed homes – called foreclosures in the US – at bargain-basement prices, then renting them out for impressive returns. But should they hand over their cash in such turbulent times?

Foreclosures accounted for …