First step is to determine your strategy (buy and hold, fix and flip, owner financing) and then the ARV you want for each project. After that I would use zillow, mls, redfin, etc. to find areas that will fit your investing price range. I would look up the city's development site and see where new development or public dollars are going.
Once you get that info, find about 10 neighborhoods, go out and drive them and reduce the number down to about 2-4. Look for listing agents that have a few listings in that area and contact them. They will be able to bring you good listings, maybe even pocket listings, and keep you up to date on what is going on in the neighborhood. I would check rents and sales prices for homes that are fully renovated and days on market.
From this point I would keep getting infor where ever I can but I would also start making offers on MLS properties or sending out direct mail to at least the homes that are in distress.
Hope this helps. Are you looking for yourself or do you have a client you are looking for?
I think to know your market, if it is your own city simply drive the neighborhoods and research mls/Redfin over and over. Look at comps for last year and what is on market in which neighborhoods. After a while you will start to see the pattern and recognize good deals
analyze 100 opportunities and you will learn a lot
Go through as many houses as possible. Spend your Sundays just going through open houses and analyzing the areas. Then you can meet several agents and build relationships
In addition to these other great suggestions, get on the email list of every local wholesaler. A property does not usually hit the email blast phase until it's been picked over by others in your areas, so most of the time it will not be a deal....But if you get in the habit of looking at all of them and analyzing a few per day, it's a great exercise to sharpen your skill AND get to know the area. See if you can figure out what everyone else did.
Every so often you might find a hidden and over looked gem, or see some value that others missed. You might know something about the area others missed because they aren't in touch....
I would also make a point of hitting as many open houses as you can. That gets you a close up look at the level of finishes that are expected.
@Jason Stoltzfus You can look at reports to see some stats for your area. For example, for Lancaster County, this is the breakout by home value for Absentee Owners with Equity.
Owner Occupied with Equity
You can also look at individual zips to see how many are there, based on the range you decide upon.
There are additional criteria that you can use to look at your market such as owner age, number of properties owned, length of ownership or financial stability scores. These can be used down the road pull lists of motivated sellers when you are ready to get started looking for off-market leads.