If that is too big of a lose to gamble, I would walk away.  

However it could be worth 170k-180 if everything was fixed and I think I could get it going as a functional rental property for the purchase price plus another 20k and some blood sweat and tears and maybe could get it reappraised in a year and do a heloc, but I could end up being 160k in when you factor in lost rent and is 10-20k inequity worth the gamble? 

Buying without title insurance is gambling. 

If not, you may want to pay the extra premium and get Replacement Cost.Property Characteristic Example - If you have a finished lower level, Back-up of Sewer for $50 probably make sense.  

Priced too high, rents are too low and investors do not want to gamble loosing a tenant right away, the leases are wonky or maybe there are bigger issues (Estate, Something wrong with the property etc).  

Id say look for honesty and efficiency as the most important characteristics.

What areas or characteristics should I be looking for?

Appreciation is a bit of a gamble, can swing wildly up or down, and doesn't pay off until you sell the property.

If you use $40k to take a trip to Vegas and gamble your money away, then I would go with $300/mo. 

More than likely a potential for more profit, but must put in landscaping and fencing, maybe $40k.If the goal is to make as much money as possible in order to have a big down payment on the future CA build, should we stay where we're at given the capital gains hit, or take the gamble of hoping the other house gets us a bigger profit margin?