I don’t feel it’s growing as fast as other parts of Lexington, so it feels more like a gamble.

However, if one could pick it up for say 10 cents on the dollar, could be a gamble willing to take.  

But isnt that more of a speculation/gamble as opposed to tangible money?

It's a little bit of a gamble, but if it's a relatively small volume then you have more possibilities.Is there anything stupid about this strategy?

One thing I'm not sure of is location in this case, I suppose I could either look in a well established area and expect equity to increase through remodeling or in a less desirable area that I'm gambling will attract more attention in the future.

Playing the appreciation game can be like gambling, and if your house is really cash flowing well after all of your expenses and your mortgage payment I'm not sure if it makes sense to sell. 

If its negative cash flowing NOW and you don't have a ton of reserves to cover yourself long term for the HOPE/GAMBLE of the appreciation play, then its time to sell, cut your losses and move on

;characteristics of building: stick-build, {structural} masonry,  number of stories, nature of foundation, basement/crawspace , type of roof, etc.

What city characteristics do you look for or is it strictly cashflow numbers? 

Some times it can work and the gamble pays off, unfortunately it usually does not.The numbers starting out look good enough to try you only lacked the experience to succeed.My advice would be to stay away from real estate.