It's difficult to tell if it's more risky to buy locally in a bad neighborhood or out of state in a better neighborhood. 

My only trouble here is that this market (Los Angeles) is very difficult right now, especially for a new investor.

My concern is that since I am starting out, finding a good contractor could be difficult and costly.

Being able to trust a valuation or a rehab estimate from dozens of different independent entities who may have varying degrees of experience and who may or may not be licensed was difficult.  

But, if not purchased at right price it will make the refinance difficult.

I don't have a lot of support in this area, and no experienced mentors at this point, so the bombardment of negativity made this entire process especially difficult for me.

However, they can also make it very difficult for owners to do this by restricting access to guest services or even access through locked gates.

I would like to purchase a short-sale/foreclosure/auction property to get a better return, but I'm not sure how difficult the buying process would be. 

Financing can be difficult but most are cash buyers or have financing lined up in their country.

Sadly it is very difficult to do that in the DC Suburbs as Russel says.