In my experience this is not as profitable as purchasing notes at a discount to principal, especially a LARGE discount, but with the note market being what it is with discounts on performing notes hard to come by, creating or originating loan may be the best way to build a good size portfolio.On the more passive side of the note investor spectrum, there are investors that purchase notes through note brokers or note originated by hard money lenders.  

(This is not a binary question, only two points along a spectrum.)Achieving the 1% rule—or even the 2% rule— in the Triangle is possible, but you need to consider such factors as the age of the property, number of bedrooms, school districts, bus lines, thoroughfares…the usual suspects, alongside your objectives and tolerance for risk.

The thing is, your typically hard money lender seems to have gone to the extreme end of the spectrum.

Familial Status is a broad spectrum...

Occupancy rates seem low as well given some overbuilding in the higher end of the spectrum?

Build a team of GC / PMsPros - Cheaper costs, more trust with team members, likely higher cash flow / appreciation potentialCons - requires more hands on work in location, time to build team, cash purchases, These may be the extremes of the spectrum and I am sure there are a lot of options in between such as using a traditional agent, etc.

Leveraging produces greater overall returns, less cash flow, and increases workload since you are controlling more properties.De-leveraging reduces returns, increases cash flow, and decreases workload since you are controlling fewer properties.Pick your optimal point on the spectrum for your own goals and values.  

Assuming this scenario is feasible, I am still wondering if aiming for the higher end of the price spectrum might be a good strategy for these low-down payment loans. 

Trying to figure out where it lies on the spectrum between "war zone" and "solid working-to-middle class".

The lower end of the spectrum you go, the more time intensive it becomes.