Phoenix is "gaining notoriety as the kidnapping capital of America" as Mexican gangs have discovered that the city's poor housing market offers plenty of affordable options for temporary housing of hostages-both illegal immigrants who have been smuggled into the country and ransom victims in cartel-related disputes-and drugs.

When the real-estate bubble was inflating, some investors bought houses and offered them for rent while waiting for a chance to flip them. By the time the mortgage market faltered in mid-2007, according to the Maricopa County assessor's office, the supply of houses for rent in the Phoenix area had swelled to 73,700, up nearly 75% from 2000.

The bust has enlarged rental-house numbers by 12,000 more, as strapped owners of hard-to-sell homes try to rent them out. The abundance favors smugglers two ways: by making owners less picky about tenants and by spawning "dead zones" containing many unoccupied houses, where there are few residents to notice suspicious activity.

A recent survey by the state attorney general's staff of 170 former drop houses found that more than half had been mortgaged with no-money-down, interest-only financing, and 42% have gone into foreclosure.

Don't let anyone tell you there aren't real estate opportunities out there in this market; it's just a matter of finding creative solutions.