Remember, you make your $ on the buy... you need to have enough of a margin in there to hang if/when the market dips.  

Based on my due diligence of the property, there should be around a 6 figure profit margin on resell.

First investment property was a foreclosed duplex in West Allis bought in 2009 at what looked like a $90k discount. 

Some numbers that I have come up with that I think will make it meet my criteria for being a possible deal are as follows:Asking price: 37,500ARV: 68,000Rent: $800Cash flow: $378/monthIf I can keep the rehab costs under $15,000 I think it will make my all-in price at enough of a discount that I can make the deal work. 

I don't know the numbers, but it looks like you are buying it at a great discount so it might work out. 

Most banks are not set up to own homes, and are often motivated to sell you the home at a discounted price."

With a FSBO you're going to have to get it at a pretty substantial discount below what he has "listed" for.

Unfortunately, being out of state means I can't always buy at a steep discount and forced appreciation isn't really an option.

Everything else was marginal to acceptable.  

Now our clients have difficulty getting new tenants, major damage if they are vacant and all the other things that happen when an area is slowly de-gentrifying.If you buy into a marginal area now, as an out of state investor, you are signing up to possibly declining values and more and more problems if the area continues to decline.I was told when I started investing in Memphis that as the population grows the higher demographic keeps moving East leaving the poor folks behind.