Vacant land, parking lots, low grade retail, etc will kick loose for residential development.

If your Lowest adjacent grade (LAG) which is found at the lowest area where the outside dirt touches the building is above the Base Flood Elevation (BFE) you might have a good shot going after a  Letter of Map Amendment  (LOMA) which will remove the property from the requirement to have flood insurance, Please note this does not mean the risk is gone.

I'm developing a multi-family community from scratch, and hired a local civil engineer firm for site work (grading, erosion control, drainage plan, etc.) design.

In fact, I never advise people to invest out of state, but with that kind of money, you might find A or B-grade stuff outside of CA that would return a lot more, and that would be of such quality that you would not have the usual C or D-grade OOS problems with it. 

@Samir Shahani, I agree with your reasoning, but generally places that rent for more do have nicer finishes and would require more expensive items (countertops, flooring, grade of carpet, etc).

Take a look at The Ultimate Guide to Grading Cleveland Neighborhoods for some quality background info on the different types of investment opportunities you'll be exposed to when investing in Cleveland.

So this is what I have... a 3 bedroom 1 bathroom home with a 2 car garage, fenced in yard, less than a block from the grade school (great neighborhood, small town).

I'm new to real estate investing, but I've been taught to hire out anything that is 'below my pay grade.' 

Have them dig down at least 6" and if possible, cap them below grade.

You’ve checked out the Indianapolis ‘Investors guide to grading INDY neighborhoods’ no doubt...