[john70t]

Buying the cheapest house in the nicest neighborhood is always a very safe strategy in any market.
Your general thinking is good.
Even minor decorative improvements($500 in a front garden) increases the resale value, and unless the whole neighborhood tanks hard you'll still be able to recover purchase+materials.

FWIW, 'Arms Length' can be a protection for the buyer as well:
Some area property tax valuations are based on actual fair market and not the sale price.
It's always good to have a copy of the city/state regs.
For example, you buy a $200K dump in a wealthy $1M area, and want your taxes based upon that, but the city assessor says "Everything else is a mil so that's what you'll be assessed on".
Huh? you say.
Since the purchase was truely 'arms length' and on the MLS a period of time, it bolsters any legal claim before a tax review board that $200K is the actual 'fair market value'. Not five times that.
Knowing comps, recent sales, and having a presentable and defendable position goes a long way.

A city assessor actually said to my mother "you paid too little for your house" and tried to double her new taxes.