However, once the relationship develops, the mentality changes and prices go up and responsiveness declines.

While a good REI investment will pay off your mortgage for you, it's still a mental hurdle that many new investors struggle with.

I'm a bit confused, and wonder if I've mentally trapped myself in a box of my self-imagined obstacles, or if I'm trying to see profit somewhere that it isn't.Any advice would be appreciated.

As far as crime goes,  there have been a few high profile incidents,  the most recent being about 10 years ago when a mentally ill individual who had come up from further south in the state broke into a home and committed a rape/murder against a couple living there, as well as a couple of other incidents of serious violence as well since I have owned in the area.   

First, get mentally ready, I'm very new in this.

Unless you have behind the scenes info, the liklihood of a deal here isn't worth the time you're investing trying to figure it all out (unless you're just doing this for mental exercise that is).I suggest you come up with some sort of threshold/prelim test to filter out these type of situations and focus your time on properties that are more profitable and more likely to be sold at the price you need.Time is your most valuable asset.  

Studying for the exam should also provide a mental gear shift while locking down a new job. 

That is the mental attitude. 

Is it possible that this woman is just stupid or mentally challenged?

As well as taking mental notes along the way.