Multi-Family in-state vs. Out of State Investing

[Joe W.]

I live in the Phoenix area and I've been looking for a 2-4 unit property here with the intentions of buying it through FHA and living in it for a year or two and then moving out.

I'm running in to a number of problems:

1) There are not many 2-4 unit properties in the Phoenix area relative to areas like the midwest and/or east coast and for the most part the multi-family homes here seem to be located in less than desirable areas. 

2) It seems to be very difficult to find one that will cash flow. I don't necessarily want to live in a mulit-family home but I would do so for a year or 2 if I can find something where the numbers work.

I'm sure if I look long enough I will find something that makes sense and if I do I will definitely jump on it but I'm also considering investing out of state in a market I am very familiar with and where I have a few trusted contacts. I believe I can find properties quicker there that will cash flow and the purchase price is about a 1/3rd on average of what I would pay in the Phoenix area. 

I know I'm far from the 1st person here to run in to this issue so I guess my question would be if you're in a market where you're having a hard time finding properties to buy and hold that cash flow did you ultimately invest out of state and how has it worked out for you?