For example, the lady that lives down the street looks nice enough to date, but I worry about her background and peer-group, they are much closer to the criminal side of life around this small city, than I want to be.
So I'm being hesitant to talk to her, because if she came to my house, she'd see all my nice electronics gear, and then probably tell her friends. Now anyone can have shady connections, but I just assume avoid the 'scarier' folks when possible.
So how do you people deal with such matters ??
Down the street, next door neighbor dating usually don't happen, unless you really have high SMV (sexual market place value), i.e. you're handsome, have lots of girlfriends, girls are naturally attracted to you, you're famous, you're very rich -- but latter usually attracts gold diggers. But anyway, if lady did not send any AI's towards you (approach invitations) you're probably low SMV. This means in your case next door neighbor dating won't be happening. Here is why:
All women are promiscuous, but they won't tell you that. Two types of women in fact exist, those that are known to be promiscuous and those that are known to be reputable nice girls. Both types are promiscuous have crazy body counts, trust me. The only difference is the type of men each one sleeps with. Girls that are known to be promiscuous basically manage to sleep with a beta guy. Beta guy has no sex or very infrequent sex, once a month, once a year type of deal, once a decade. What beta does when he finally scores?
He goes tells about it everyone! That's how women become promiscuous and loose their reputations.
In fact, most women sleep with alpha males. Alpha male gets lots of women, top 20% of men are alpha are dating 100% of women. Betas, the lower 80% are pretty much not getting any, sometimes though, they do get lucky. This is where infrequent sex comes from. Once a month, once every couple of weeks, once a year, whatever. Alpha has many women, sex is frequent. Women trust an alpha male with their desires and wants. Alpha understands women. Betas have no clue what is women, how to talk to a woman, what to do with a woman, etc.
Women rarely date their neighbors, unless SMV is high, because reputation is easily ruined. They are hesitant with alphas that live next door. What chances are for a beta guy? None. Will she talk to you? Sure. Just to be nice. Will it escalate to something sexual? Probably not. So you don't need to worry about bringing her home.

Get that fear off your chest.
Now as far as hesitating talking to women, you should approach all women. The more you approach the better you become with women. The better you become with women, the more women you date, and that results in higher SMV. Guy who is seen with lots of different women has much higher SMV than the other guy.
I'll leave you with one of my favorite AMS videos, I hope this video will inspire you to man up.

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