In general this area seems really expensive to insure (every quote I get is around $1/sqft for the year, which is nearly 3x what I pay in California) so I wanted to check with some of you folks. 

This is primarily because I am a buy and hold investor (Cash Flow is King) and damn near nothing cash flows near Austin. 

If you want to stay near the base look at Millington. 

Section 8 is not nearly as complicated as it seems, and is really pretty simple. 

Add to that that the rents are at or near median rent in Memphis and this reads out like a very risky investment - average to below average at best, imo with the little info shared on location.I like the way @Jason DiClemente advised you to look at capex. 

Nevertheless we listed our house at the same $390,000 as the other house, a price that also seemed reasonable based on past student rental sales near campus, albeit none in our very nice neighborhood. 

They would rather stay near their church, family, friends etc and see these D neighborhoods transition. 

Take your proceeds and invest locally near where you live so you can keep a close look on the properties and run a tighter ship

Constant evolution and education is the key! 

I am located near downtown.