Buying in an expensive area - Numbers not adding up

[Tommy Barone]

I live in a small beach town where a run-down 900sq/ft house was listed at $400k.  This is typical in this area right now, little shacks going for over $300k and actual nice houses with a yard, out of reach.  I'm looking to get into a rental investment but all the math works out to about -$7k/yr in cash flow (at least).  There's just only so much rental income for winter (college: 9months at $1500/mo) and summer (8 weeks at $1500/week), and the mortgage will just be too high to generate positive cash flow in any rental scenario.  

My question is, what are the options?  Is it okay to have negative cash flow, as if you're just paying into a future investment? Do you just wait the market out?  

There was a podcast about a young couple who bought a 4plex in Jersey and beat the odds regarding the "can't make money or buy there"...but those aren't common where I live.  

I'd even house hack but it's all garbage around here and will need a lot of CapEx as well.