They have told me that I am well over my limits with my current mortgages as they don't fully count rental income towards cashflow.I am not keen on selling either of my houses as they are both in my plan for long term appreciation and feel like they will go up much more in value if I hold them for a number more years.I know there are a whole selection of success stories on these forums and was hoping someone may have had a similar situation or might have an idea of where to direct me for advice or reading material that can help.

I know if I was limited by funds I'd go with something more proactive like cold calling or heck even going by peoples houses and putting a note on their door.

It certainly has its limitations but for a first time manager its really intuitive and quite easy.  

I'm looking at a neighborhood that has always been rough. Today, 3 new spec homes have been built and sold simultaneously for $350,000+. In this area, nothing has sold for more than $60,000. Old properties, run-down, ...

I totally get that I can't predict the future, but it seems like a limited amount of educated speculation may not be a bad thing. 

I have found a property that cash flows on paper, $220/mo after paying PM saving for repairs cap ex vacancy etc… rent would be $1000/moThe problem I am having is its in a bad area and I’m working with limited funds so bad areas are all I’m able to invest in currently, until I can grow my savings and BRRRR a few houses that I can pull some extra cash off the back end with the refi. 

I suggest you start by understanding your loan limitations. 

Is there a limit to the conventional loan for a 10% down second home loan?  

The limitation is that if I want the exemption, I have to agree not to rent out the place for 12 months after the date of completion.The only loophole is that if the construction cost is going to be less than 30k, no licensed is needed so no need to apply for the exemption hence no 12 months limitations.

If you are looking in this area specifically, I’d buy right outside Wasilla city limits and skip the hassle.