I am very familiar with this neighborhood and know that this home would sell for more if it was listed for sale tomorrow.I proceeded to appeal the appraisal and back it up with lots of documentation, but did not have success in getting anything changed.  

This property is appealing to me because it is selling so far below market value but I'm concerned that if I was stuck with it for a while, I would only break even or possibly lose money on it.

They will only work with properties that are deemed habitable and safe.As Caesar pointed out, somebody who can put down cash may be a more appealing buyer, but on the other hand, if you don't have to put anything down, you may be able to come back with a higher offer that beats the cash offer.

Different parts of it appeal to different people.

Thanks Travis- our realtor recommended a reverse 1031, but with the complex transaction my folks are involved in, it didn't appeal to my Dad to pile more on. 

So taking a multi family and fixing it might appeal to them for a time.

If you were the seller, would this look at all appealing or am I going to get laughed at?

Conversely, IMO, if they DO WORK, then the environment doesn't matter all that much.Yeah, I'm asserting that California issues, Class {b,c,d}, the street appeal, and your exit plan can all be factored into some $$ value that leads to a go-no-go decision on the REI. 

They had made changes outside immediately to personalize the house and  improve its curb appeal.

I did have bids from a few 3rd party companies for full management that were very appealing (5% fee which is great for a 32), but it hurt the returns enough that I wasn't going to be able to get my investors the returns I wanted.