Cheaply priced rental properties you're going to be dealing with a lower demographic of tenants and the hassles will become your full time job.

That gives us constant eyes on the property and it allows up to keep LTR rents a little lower than market.

I suppose I can expect some level of appreciation considering the housing market in Columbus and the areas that I am looking at (Franklinton, King-Lincoln Bronzeville, Marion Village, etc.), but I can't really put a hard number on that.

There are big benefits in holding a property rather than buying a new one such as that the property taxes will be lower due to not being reassessed as they are on sale.

What if you buy a lower cost property?

But the gas and water need to stay in our name as landlords (per the water and gas companies), and we will bill those amounts back to the tenants.We have 1 single man who has 1 child who will live with him 1/2 time in the upper level, and we have 1 single woman who has 3 children who will live with her 1/2 time in the lower level.

1st off- Kudos for your enthusiasm to tackle a difficult problem; adopting new materials and building science understanding on really old structures.Success levels for energy retrofitting will be directly tied to the level of "gutting" you do to the old house, especially trying to add a vapor design and passive ventilation retrofit. 

They tend to have lower credit scores or other issues.

I finally called around to other property managers who laughed and said absolutely not when I told them the current management company had not found a tenant and wanted to lower the asking price from $1050 to $950.

Dayton had a lower price point and less investors competing.