Drive the neighborhood in which you want know.

My preference is to buy and hold, and receiving an income via rent, apparently.I think the first step would be just driving and getting to know the area better.Any other suggestions are welcome and appreciated.

Personally I charge $500.00 for a renovation bid as an investor pre-purchase tool which frankly is cheap considering the typical bid requires 3 hours or more of drive time and on site project inspections then another 2-3 hours of typing out a comprehensive bid that considers all desirable finishes.

Pennfed did a 12 yr variable loan for me, no closing costs and a drive by appraisal. 

I am not a banker but they are doing so many of these loans they crunch numbers, use software and maybe have someone do a drive by.If there is good equity in the property based on your remaining mortgage and if they have any doubts they may restrict your LTV but I don't think all HELOC's come with a detailed inspection of the property.

If you built your list by driving around you're not going to have enough volume. 

You do not drive buyers all over creation and can use your time more effectively.Working with investor buyers on residential submitting tons of offers lowballing properties to make a tiny commission might not be the best route for you to take starting out.

when you see a house like this would you 100% of the time just keep driving or is there always a slim chance it might be worth trying to flip of the numbers are right?

If you are considering starting a direct mail campaign in order to find leads and create deals then hopefully this will help you.You need to drive for neighborhoods that you want to buy in and look for properties that will be tough for the owner to sell if they ever need to sell.

While driving for dollars I noticed a few homes that looked distressed.