Based upon my research of the area around the Grove PATH so far, I think $1500-2000/mo is reasonable rent for a unit, which puts me at a cap of around $725k for a property (FHA PMI is killer…).

Don't base your decision on the "median sales price in Tempe", or what Zillow or Realtor.com is telling you. 

I would advise that you continue to educate yourself on the different avenues of REI and decide which could put you and your wife in the best position based on your goals.

I'm new to real estate investment, based in Brooklyn NY but looking to invest in my hometown of Rochester, NY.

Dover seems to be a good opportunity with colleges, Delaware government offices and an Air Force base. 

The tenant base is the lowest of the low, bottom of the barrel, in regards to tenant pool.

But again based on exact location as some can be much lower or much higher. 

Then there is the damage done to the base of the garage structure itself and I need to know what my risk is and and what it would take to fix.  

Loan values on conventional loans are based off the appraised value at the time of purchase.  

Unfortunately it seems like they pick and choose their buyers and it isn't based on price.