Just cause they don't fit your investment criteria, we shouldn't steer other people away from them.

I think your best approach is to pretend you are the investor yourself, calculate build cost (mortgage with interest) + Maint / cap expenses/ management fees according to your zoning and then compare that to the average rent in that neighborhood.

In comparison to the FHA 203k Loan, the homestyle loan appears to be a better fit for me.

If the property is a good fit make an offer. 

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

C-class neighborhoods there are ideal for Section 8 and long-term renters.

There's no one size fits all approach to real estate investing and depending on your resources, skill set, and capabilities you may excel in one particular market or utilizing a specific strategy whereas another investor will excel using a different approach.  

If you're looking at Cleveland, I suggest reading The Ultimate Guide to Grading Cleveland Neighborhoods to get yourself an understanding on the market. thank you!

There are some exceptions in each market where the neighborhood is really nice and there are a huge variety of finishes / price points but I still would want to be with the comps of whatever price point I am shooting for. 

People have WAY overstated "cash flow" on BP by ignoring the costs of capex, vacancy and turnovers.My goals in every transaction now are to (1) buy in good neighborhoods, and (2) minimize my outlay of cash.