I am sure there may be other factors that I don't know about that contribute to your dilemma but the definition of high crime area is very vague.If it was me I would give the neighborhood a try. 

It all depends on the area and hassle factor your looking to put up with.   

When we buy un/under-loved property to be a long-term rental, we factor a deep retrofit into our deal analysis and offer.  

I’m not very big on appreciation plays(renting a property with negative cash flow in hopes of appreciation) There are way more X factors than you can control.  

@Julia RockwellJust look at ALL of the negative factors that led you to this place:"felt some pressure since my apartment lease was expiring"Want to be near downtown and nothing on MLS near downtownCompetition with all-cash buyersCompetition with someone looking at it at the same timeNot given "much time to think about" it"I definitely felt a lot of pressure""swayed by the location""fear of losing"All of these things are common stressors which trigger a fight or flight response in your amygdala.

Also, what other factors would you take under consideration to override the higher historical cap rate?

But if you had net loss without factoring salary, Yes, you can offset other income two way. 1) If you AGI is below 150k and 2) also because you can qualify for Real estate professional if you do rentals full time. 

I’ve used it before on primaries since there’s always an emotional factor that is hard to put a dollar figure on when you just want the perfect house that meets all your wife’s criteria, but for investment properties I usually just offer the highest I’m willing to pay if it’s a competitive situation, need to avoid the crab in a barrel syndrome and becoming the greater fool when it’s an investment.

. :)No, when he told me about the issue, he hadn't factored that info in. 

Look at the numbers, the real numbers factoring in occupancy, and go from there.