Arlington is solid, but the rental rates have tended to be a little lower, so you have to find a deal. 

My concerns are as follows:1) Insurance claim will take a bunch of time and they will deny it since they do not know the origin, when it occurred, etc. 2) In their review process, they will determine an 'overkill' level of damage that I will need to repair, and then deny the claim anyways for whatever reason.

I don't want a property that is going to be a constant worry or attract a lower quality tenant.

The lower the number, the longer it takes, and the slower it takes as the more it costs to move forward.

We are desperate to lower our monthly living expenses and are currently saving in hopes of being able to house hack on a MFR when our lease is up in December through an 3.5%FHA loan.

I have chosen the Durham market (primarily for 2 reasons, I am tad bit familiar and also would like to own it as either a secondary home/rental property).The question that I have is, property taxes in Durham county are pretty high, roughly 1.3%, but I have been told by a property manager that the assessed value always comes up lower than the actual fair market price or the sale price (on a new home), and it's more in the tune of 1%.

There will eventually be some overlap as older units deteriorate and become low income units if the owners defer maintenance and don't maintain their rent price levels.

Through doing this you will want to lower your list size and send most likely look to sending direct mail. 

But like I said, to get an electric bill close to $500 for July when we're already at the lower summer seasonal rental rates makes it really difficult to make any money at all....I guess it's better than being empty. 

You need to see saturation levels for the area for the product type retail, medical,etc. you are thinking of.