Wow.... that's hard to nail down to a single thing because there are so many things that, if done wrong, can result in the collapse of the entire business.I guess I would have to say the single most dangerous pitfall would be failing to create a comprehensive business plan/model that provides a solution for everything that will need to be done..... as well as anticipate market changes which require adjustments to your business model.There's a famous military General (I think it was General Patton) that was credited with being a military genius because he gave immediate and specific commands for every scenario the battlefield threw at him.

What I would like to know is what would be a good price on a property that can command a $500/mo rent?

There could be significant differences in the rent a property can command just based upon the finishes inside it.Once you understand your estimated market rents, have a solid ARV, are comfortable with the rehab budget, and know roughly what your financing will look like, use the BP calculator. 

I feel that I could command a premium in rent if I market it to the right person, but the pool of applicable tenants is pretty small.

I wish I knew more about the san diego market but the other option is buying something super beat up and fix it up to force appreciation as well as command higher rents.  

I 'd suggest you try to get deals when you get to a point when you really understand what goes on, but frankly, in reality, it takes time to mature and gain the knowledge that will be required for you to command the confidence of others. :) By formal education, I'm speaking of core classes, there are about a dozen college type classes that will give you a much greater head start than the ones who don't have such knowledge.

But I want the property to COMMAND $x price when I'm done with it!

Sounds like someone in command of the HOA could have a Barney Fife complex ;-)

Are rentals commanding top dollar or priced low? 

For example, I bet you could tell me which parts of North Hollywood read "Arts District" even if they're not exactly in it (and therefore command higher rents than outsiders would expect).By going out of state, you're throwing away your most valuable advantage over everyone else.Separately: The yields in LA are lower, but the risk is a lot lower, too.