The hardest part about this scenario is finding a property in the Bay Area that falls under FHA loan limits.

If you have a choice of buying good or buying bad I think I know on which side I would fall.

Hook up with some more experienced local investors who like to chat.Just remember never to fall in love with your investments, they are vehicles, their purpose is only to get you to where you want to go. :) 

I will continue to do some reading and studying so that when I'm ready to start investing hopefully but next fall, I know which direction I want to head.Casey

Lastly, our market here in the Bay Area has a unique opportunity of prices falling.

@Ted Fall @Ellie PerlmanTed: You need a good underwriting analysis to help inform your decision making.

While landlords hate to drop rents, and resist it like the plague, make no mistake that during a downturn your income will fall even if you don't drop rents.Vacancies will increase, credit loss from non-paying tenants will increase, eviction costs will increase, you'll have to offer concessions like free rent or temporary discounts to attract tenants and keep the property full. 

I believe that this property falls in the Woodlawn area.  

The fence in the backyard is starting to rust and fall apart. 

@Jennifer Rysdam that sounds like it would fall under "lease violation", if that's what your lease states.