Another pitfall is under improving properties in low income areas believing that since its a depressed area in terms of income the people will not have high standards. 

Tax deed auction last week there's a house in an economically depressed area in northern New York State (Clinton County). 

There were many limiting beliefs from my depression era family largely due to scarcity mindsets.

Let’s see how HUD reacts when the recession or depression happens....

I know, it sounds rewarding at first, but it ends up downright depressing.

In all honesty, this rental increase in a depressed area makes me wary that future increases will be more unreasonable and more extreme, and I should "get while the gettin's good."

Rust Belt (like you are looking it) is OK but pretty economically depressed.

When first starting out using a Buy and Hold strategy and with limited capital, do you think it's better to purchase a bunch of lower priced properties in lower quality / depressed areas or spend a little bit more but have less quantity or rentals (but presumably higher quality tenants) for properties in an area that is well known for being a "good" area?

It's a depressed economy and you're not going to be able to get great rents. 

It weighs you down and can result in anger, anxiety, depression, or other negatives.