I would also recommend that they have sufficient 'skin in the game' IE additional down payment above and beyond just having lived there a while. 

I do a few transactional a year but the vast majority of what we do is wholetail.. buy it clean it resell it.. then of course you have full rehab..

Entry costs are lower out of state but I have a great Real Estate agent with a vast network I can capitalize on. 

I already gathered sufficient capital looking to build up a network of realtors/brokers/handyman. 

A market open for ignorant $, will abuse and neglect the vast majority of it.

Specifically, do mid-sized to small towns outside of big cities have sufficient rental demand for rent by the room?

The vast majority of lawsuits against Landlords are for wrongful eviction, security deposit disputes, and Fair Housing Violations.

When you bid on a tax deed at the Sheriff's auction you must have sufficient cash in the bank to be able to get a cashier's check to cover the full amount of the purchase on the day of the auction and you must be able to live without the cash as it often takes a year or more before tax deed investing provides any return of capital.What is a Georgia Tax Deed?

You have a general idea of what you are looking for but those are 3 vastly different markets with variations in pricing and inventory.

AND, I would require that there be a smoke detector in the garage that is "connected" or "talks to" the smoke detectors in the house so that if a fire does break out in the garage, the tenants can get out out before the house burns down.I would also make sure that there is a sufficient fire wall between the garage and the rest of the house.