Wonder what is triggering it, and whether it is sustainable if it is mainly driven by STR investors and things start to saturate. 

Frankly - this space has become extremely saturated over the last 10 years - so the odds that you find this one "diamond in the rough" deal is relatively low all things considered. 

We also expanding into additional markets as we determine the co-living demand in a market to be close to saturated.

Within the city limits there are essentially no regulations and one can reliably obtain a permit with some due diligence, however as a result the geography is saturated with active vacation rentals. 

.- Jumping into up and coming market vs renovating in a saturated market?

A slightly saturated market could mean a more motivated seller. 

Buy-in is a lot more conducive than other overly saturated markets.

They didn't account for regulatory changes or market saturation, which could lower prices.

However, the smell of pet urine is extremely bad and the floors have been saturated.  

@Shivani Kumar With family that has a portfolio in the suburbs my observation is that the market is too saturated.