If you really can't see a 10 year horizon for this property, then don't buy it. 4.

I spend a lot of time looking at trends and data and as much as I am looking for the clouds on the horizon I don't see any.

He has already done a lot of window renovation work in some of the older, historical buildings on the east side of Milwaukee and he wants to use this project to expand his horizons into more extensive interior renovations.The ideal project would be something that does not need immediate work but that would benefit from upgrades and renovations over a period of 3-5 years.

It depends on your goal/time horizon/capital. 

@Bryant Blackwelder, You may want to adjust. your time horizon if you want to 1031. 

Which areas would you consider emerging with a horizon of 5 years that will appreciate by then ?

There will be ups and downs along the way (like natural disasters, problem tenants, recessions, bad property management, etc) but if you can keep pushing through all these obstacles and keep your eye on the horizon that seems very far away, you're likely going to make money in the long run.

Conversely, a 6.5% cap deal might be a dog if there’s no upside from making improvements and negative rent growth is on the horizon (like you are seeing in San Francisco right now).If a genie were to grant me three wishes I think I just might use one of them to to ask that all real estate investors would immediately stop thinking that the cap rate associated with a real estate purchase means a darn thing.  

I do not know what your time horizon is. 

My question is: did you take into account the original poster's differing investment time horizon when you posted your response to me?