Their combined house hold annual income is over $90,000.

The laws are so twisted in this State in the favor of the big banking system and lenders. on top of all of this, the average household income is dropping in this City while the home prices are rising rapidly. 

Hey Max Householder you are right and that's it: http://biggerpockets.com/nomoney

I've been looking at FHA and USDA, aware that you cannot own any other home when using USDA, and USDA cannot be used for an income-producing purpose (also has household income limits per household size but amounts vary per county). 

If you make it through the wall of text that follows, and you have even the smallest insight to offer, I would so very much appreciate it.My wife and I are rapidly learning the ways of wise REI through the help of the BP forums, podcast, books, as well as attending local REIA meetings, networking, market research, and driving for dollars.We've arrived at what I feel is a major pivot point in our lives, and are struggling with the multitude of circumstances life is throwing our way, trying to figure it all out, and set some reasonable goals so that we can move forward in a clear defined direction.I'm going to lay it all out in brutal detail in hopes that someone can make any sense of this and possibly offer some guidance.OUR CURRENT STATUS:I have a day job as an engineer, a freelance business on the side in which I design products for clients around the country, as well as a fading IOS app development company.My wife has a small house cleaning business, and she takes care of all the household management, as well as just being assigned as power of attorney over her Grandfather's estate.We have zero savings, but are on track to be completely debt free in two years on our current plan.

But I have friends such as @Andrew Michael who invest there.Median household income there is like $35k.

Max Householder Yep, I did that too and used Craigslist.

The apartment is at the edge of a B neighbourhood with mostly single family households.

We introduced ourselves first by letter and asked to meet with each household.

I have my rough formula, but I still haven't determined w/confidence one that I can apply across the market to determine where to invest... yet.for now, some of the factors i gauge (in no order) are:(flipping)median incomemedian household size (kinda)median home sales for the hh size i'm targetingproximity to major work areas (i.e., corporate, factory, etc.)unemployment rate & trendschool statsowner/renter ratioprice-rent ratio(rental)prox to major work areasrental rate for a 2brue rate/trendin my first attempt to determine "best bang for the buck" for rentals, i took national statistics and crunched them into a spreadsheet. this thread discusses similar to "selecting a place to invest" topic: http://www.biggerpockets.com/forums/432/topics/72764?