To make RE work, of course, you need cash flow and ideally GOOD cash flow (when measured based on say return on equity, or return on cash invested)Unless you've got really deep pockets you should be looking for that 10% + return, if not more.To achieve that from my experience you have to be prepared to DO WORK!

Deep experience in Real Estate, Business and contracts. 

You don't want to dive in too fast and wind up in over your head.

We'd like to dive right in and take over a few properties. 

:) Read the forums, listen to the podcasts like you're already doing, ask questions, read some more, dive in, make some mistakes, learn, and grow.

unlike much of the mid west rust belt deep south were some neighborhoods are all rentals will always be all rentals and there is simply no hope unless there is some massive redevelopment going on and developers buy them and bull doze them. 

I was considering ripping out the carpet (has some tough stains), installing new vinyl wood floors, repainting the walls, do a thorough deep cleaning, and converting the loft room back into a bedroom (putting up the top half of the wall and putting a door in), and then finally rent out the townhouse.

It's great to hear your story as you sound very inspired to dive into real estate. 

If so, you know the existing structure may be less than worthless (as you would still have to tear it down and dispose of it) and the structure and foundation need to be inspected before you get too deep into agreement on a price.  

There is so much to learn in real estate and it'd be somewhat risky to forego the learning process and jump into the deep end.