It is NOT just an 8% property management fee either, it is familiarity with the market, being able to locate deals, being able to manage renovations, not getting ripped off on repair costs,being able to verify that everything is running as it should be & being able to quickly diagnose/fix when it isn't, not suffering from high turn over from poor tenant screening & management, not spending a fortune on airfare to fix issues, and generally not being 100% reliant on others who may or may not have your best interests at heart to make the investment work.On the other hand, if you study things this way and compare multiple markets, you will see that places that have inexpensive property and high initial cash flow do NOT have high appreciation.

Start by attending your local REI meetups.I would also suggest that you sit down with your wife for an hour or two and write down your goals, why they are important and how will you suffer if you don't try to reach those goals.

Not to be a buzz kill, I suffer from analysis paralysis myself, but that comes from blowing money and wasting time before, never really looking deep into the realities of my commitments.

Secondary states yield more than in California, but you are taking more risk because if the economy goes south the job market is probably not as strong or diversified, so your investment may suffer.

Be bold and dont suffer analysis paralysis. 

My personal opinion (not a legal one) that you did not suffer a real loss.You need to sell the place, and the property now probably worth more because of those improvements you made and may be will even sell faster!

If it didn't balance out in my favor I wouldn't be in this business.I take risks, and suffer stress and headaches, and in return reap a reward.  

I'll just comment that the area suffers from blight and is already congested.

Buffalo has traditionally suffered from several problems pertaining to housing, specifically, an overall population decline in the city proper; one of the oldest housing stocks in the country; and a general apathy in terms of the local government and community groups.In 2007 and 2008, I was working on several anti-fraud task forces dealing with these problems.

If I don't do a 1031 exchange, then I'll suffer a tax hit on the mandatory depreciation for the years it was a rental.