Real estate vulture funds are scouring the U.S. for distressed housing developments and land sites being sold at cheap prices by homebuilders looking to clean up their balance sheets. These funds, which target internal rates of return greater than 20%, are not betting on any immediate recovery in housing. Instead, they're seeing profit in buying the housing sites today --many of which are selling at 50% or greater below their peak 2005 values -- with the aim of flipping them or selling homes at the projects in two years or more. "We're seeing plenty of opportunities. The market changed in the last 90 days," says Rich Knowland, a partner with Pacific Terra Holdings, a Seal Beach, Calif.-based fund that is looking for land opportunities on the West Coast. Land prices over the past year have generally been "sticky" -- meaning prices aren't falling much, if at all, even though housing prices are sliding and public homebuilders are recording massive impairment charges to write down the value of their land holdings. Now, however, distressed opportunities are starting to emerge in California and other overheated housing markets. "We see in certain situations where that is loosening up, not by choice. Many deals have debt. Prices have to go down to be moved," says Knowland, who joined Pacific Terra earlier this year after leaving his post as regional vice president of Lennar's ( LEN) Orange County, Calif., division.