Judging solely by the numbers, it's clear that the Western US is home to plenty of distress: the most of any region in the US, with nearly $59 billion worth in 3,280 properties, according to a November report from New York City-based Real Capital Analytics. Despite the consensus that the problem properties will not hit the market in a flood, the distress is there. The challenge for investors is how to find the deals they want. Receiver Taylor Grant of California Real Estate Receiverships in Newport Beach, CA says that finding good distressed deals in 2011 may already be difficult in some property sectors. "I think we have worked our way through most of the quality residential land deals, with some exceptions," he says.

For the coming year, Grant expects "a tremendous amount of interest in pushing values on quality distressed assets," such as a 115-unit apartment complex in Glendale, CA for which he is the court-appointed receiver. The property, called 416 on Broadway, has generated 20 bids and is being sold as of this writing. What's not so clear, according to Grant, is what will happen to "properties at the other end of the food chain" in outlying markets. He cites the 10- unit apartment complex in the city of Twentynine Palms, CA for which he is also receiver.

A similar distinction between top and secondary markets, quality and lesser-quality properties drives the market for distressed hotel sales, according to Alan Reay, founder and president of Irvine, CA-based Atlas Hospitality Group, which publishes a quarterly survey of all the distressed hotels in California. The Q3 Atlas survey showed 529 hotels that were either in default or foreclosure, a 71.2% increase over the third quarter of 2009. But that number could increase significantly in 2011 because of a "huge shadow inventory of distressed deals that have yet to hit the default market," Reay says. The figure could rise by another 1,000 hotels.