So while the inventory is much lower (less properties to choose from for picky retail buyers), it's usually the best time for investors to negotiate a deal. 

If you stick with one method, as soon as the market changes, you will have a severe lack of inventory.

If a loan via a bank requires the terms to be conventional (5% down), FHA (3.5% down), etc.

You can speak to the lenders you are talking with about their debt to income etc. if you are getting conventional loan they will take that into consideration, if you go with a DSCR loan they look more at the metrics and financials of the property.

The inventory is there but the cost of living is so high people just can't afford to buy anything.  

I have some inventory in these markets that might appeal to you.

Many will disagree with me on this, but I have personally originated several loans underwritten with Fannie Mae for conventional financing and accomplished the financing when there are 4 leases for a 4 bedroom SFR. 

Hi Jason, For conventional loans concerning rental properties reported on your PERSONAL tax returns, underwriters will calculate your net rental income based on your Schedule E from your most recent tax return (using Fannie Mae form 1038), depreciation and depletion can be added back in to offset the expenses of the property.  

Conventional financing for fractional ownership---who is gone mainstream with this type of financing?

You might be able to check how much inventory is already in the areas you are looking.Happy to talk through your plan in more detail and let you know how my experience has been.