Some good advice shared on how to mitigate the cost obstacles you are facing but I am afraid what you perceive as high costs are actually normal costs associated with single family homes of the vintage you purchased.

However, if the nearby high-risk area poses too great a threat to perceived safety and could potentially deter quality tenants or future buyers, it's probably too close for comfort.

Price and value are not the same thing and it isn't the price that has been the problem it is the perceived lack of value.

Rates will come down faster than MBA/NAR are currently forecasting. 10Y treasuries are comming down, but also the risk-premium spread to 30Y fixed will normalize as the perceived risk of a housing market crash is shrinking.

Given need to (potentially) seek outside investment from family for conventional.I’ve heard FHA is tough in these popular areas due to more stringent inspections, longer time to close, and perceived higher risk of riskier buyer and deal falling through.

@Jeff Hamann Couldn't agree more - everyone is usually looking for the next hot town/city when what they should be looking for is the perceived trend of a town/city as a function of the price.

Two things you will learn if you do this long enough: people always act in what they perceive to be their own self interest, and renters will tell you any ******** they think justifies their position.

Cap Rates are also a market indicator of perceived risk in the investment.

One person may take the “it adds perceived value”approach, while the other is cost conscious.  

They adjust based on the perceived increase in value.