A year later I had the confidence to buy another one and after that it was on.

Once you have a few under your belt and are confident on renovation costs, have your team in place, etc., you might roll those dice.

If this is how they run their operation, I don't have any confidence in them.

My audience I was shooting for traveling nurses & displaced families

The property cash flowed well and covered our expenses in 2021 and 2022 with short-term rentals and about 80-85% business use, but it did not rent as well in 2023 (oversaturated rental market, change in travel restrictions, weather etc...) and dropped to about 65% business use and a negative cash flow of about $15K.

It sounds like he believes CAP rates have a significant chance of going higher still given most likely conditions.Hospitality can be highly risky as some asset types can be heavily affected by a recession and corporate travel restrictions. 

With only 100k to deploy the Midwest will offer cash purchases and more monthly cash flow and usually less dollar appreciation, long distance travel, and extra time to manage.

How can one be confident about how much room a market has to grow?

I would prioritize the day-to-day details of your life that will be affected by this decision - for example, regardless of what market you decide to get involved in, you will likely end up traveling there more often than other cities.

The market is always strong because of the growth there as well as diverse people who travel in and around there with the Military, space and rocket industry, as well as many other tech jobs.