Does that make it speculation and not investing? 

We might not be amazing for speculation but economy is very stable.  

Every dollar of equity reduces that cash flow potential as it is the equity and not the propertyy that is creating the return.Appreciation is a aspect of owning properties however it is speculation not, by definition,  investing.

How can I properly evaluate properties without speculating.

Investing for appreciation has its place (this is called Speculation), but NOT when you NEED the appreciation to avoid living paycheck to paycheck.

You make mistakes estimating costs, or have overly optimistic assumptions that will get you out of a bad opening situation (if your model depends on significant rent increases from prevailing rent rates [i.e. it's already market rent in the building] then I think it's more akin to speculation) then that could fail, and you could end up feeding cash into your project, which leads to ...Not maintaining sufficient reserves.

If you are looking for an income stream you can certainly find a 10 cap in the US.If you are looking to speculate and hope prices keep rising, certainly Vancouver, Toronto, and Montreal are decent cities, but prices and cost of entry are high.

I think that investing out in the middle of nowhere tends to be very speculative. 

Flipping is speculation especially since the RE is illiquid and may be hard to sell in slower markets. 

First I found a source of financing that would loan on speculative home.