Additionally, the area is rapidly appreciating with new construction all around, coffee shops, a microbrewery coming this summer and several good eateries already open a block away.

In my neighborhood (Berwyn) the average deal single family is about $250,000, so the two hours I put into walking the neighborhood can rapidly be rewarded. 

We get people from Iowa City and Cedar Rapids.

Location: 8547 Acapulco Way, Stockton, CA 95210 - Current Price $168K (and dropping rapidly).Figure 1: Here she is; the Jewel of Acapulco Way!

But given one can always refinance the loan, the costs of the additional interest will be trumped by the initial equity and closing costs you save. 2nd, there are incremental closing costs of 1% of the loan value.

Is it dumb to buy a property that's around 150k even though the appreciation rate has been increasing rapidly. 

I believe that an incremental rent increase is the best way to go.

When you factor in the cost of the hypothecation debt and the taxation on the resulting income from reinvesting that money in something else, you would need to determine if the net incremental increase in income is worth the effort and expense. 

Some of the saving on the 1's and 2's was done in small increments - for example, being more conscious at the grocery store to buy the store brand items when we could.

Buy at an extreme discount off the true dollar in a market proven to be able to rebound/appreciate rapidly.