Or do they care more about the consistent cash flow or possibly upside when selling the property?

Some things to thing about in this approach: you are forming a partnership through an LLC.

However I haven't contacted an agent there yet and only searching through website like zillow and such. 

If they can’t or won’t help, you will have to call a lawyer to help you through the process.

I am a first time home buyer looking to purchase an out of state investment property through a newly formed LLC (I am based in NYC, looking to buy in Ohio).

Would you mind talk me through the process a bit after the appeal is initiated?

Cash flow is better here, but appreciation is less (CA is off the charts for this metric compared to most of the country, so it's not that OK is bad- depends on your goals and expectations). 

The original deal fell through.

So, yes, each new offering is an opportunity to move to 506(c), but for these established groups with established networks that are limited by good deal flow versus capital availability there is no need to change the process and compliance requirements needed with a 506(c) offering, since the entirety of their marketing and raise will be limited to existing investors and/or referrals.Again, for OPs purpose, it doesn't make finding them easier, admittedly, but to imply that 506(c) equates to better operators is not true in my experience.

I would also like to take advantage of forced appreciation through rehabs to create equity with each purchase.