It seems 'logical' that both the hottest selling and economically depressed areas are both to be avoided (??)

This would include:  Real Estate Agent, rehab contractors, funding sources, etc...                     ...have I depressed you enough yet?  

If in this day and age, in a great economy, the comps are all selling for 25% or less of replacement cost (a pro developer could not build them for that), that means you are looking in a VERY depressed RE market where prices are deflating well below inflation and you are likely taking on some serious risk IMO.

That would definitely disrupt the market and depress rates.Also don't underestimate the amount of resources and management involved.

There is a lot of opportunity as taxes are favorable and pricing isn't out of control (yet) You have to be careful which section you invest in though as the area is still fairly depressed.

Aside from major economical events like the Great Depression, World War II and the Oil Crisis, this is a pattern that has been happening like clockwork for the last 2 centuries.

Specifically in South LA in these zip codes: 90018, 90008, 90043 AND 90062.Seeking depressed properties to flip. 

I tied up the land 3 years ago at still depressed prices..

The ONLY way to devalue the property would be to lower rents and that would be necessary only in a depression (assuming the neighborhood did not turn into a warzone).

or a depression child.for property worth      >>selling the buildings for around 1.6 mil<<He could make more in a standard (money losing) savings account.This may sound harsh, I am sorry.But this does not seem to add up.Maybe you should step in.