I don't gamble on future appreciation.

If you buy in those areas you are really gambling on appreciation on the back end more than cash flow growth today.

You are correct that market appreciation isn't a blind gamble, but it is speculative.

So essentially I am stuck either investing out of the state (20% down) OR gambling with rent increasing (possibly negative cash flow for a bit). 

Unpermitted may not be a huge deal in some cases, but when it comes to egress and life safety issues you're gambling more than I closed off the dining room and made an extra bedroom.

Investing was not at the forefront and when I returned it took some time to settle back into normal life.Fast forward to 10-2013The day job was really taking it's toll on me stress wise and re ignited my passion for REI again.

Buying a property that you know would be cash-flow negative from the start is gambling on appreciation.

This is because we have agents and sellers who're gambling with the current market and trying to attain REHABBED property sales numbers.

This is the bank's gamble to try to meet their criteria, for example, Lets say the market conditions are stable, and marketing times are 30-90 days according to the agents BPO, or an appraisal, the bank might be inclined to accept offer #1 with a 30 day close and keep the other 2 offers as back ups.

It's the engagement in learning that ignites that flame of inspiration and fuels the hunger to be successful and to make something of myself.