If the the demand is there, the homes are likely to still appreciate over time. 

Experienced managers can help evaluate potential investments by providing insights on rental demand, market rents, tenant preferences, and location-specific factors that affect leasing success.For example, rental properties need to be close to conveniences like major roads, shopping, and schools.

Cheap homes for an area are cheap for a reason - low to no demand from local investors or owners. 

If so, invest.Then, ask yourself does this property provide the characteristics you need for it to give you your return-- location, rental demand, buying demand, physical structure, etc.

To me STR and hotel caters to different groups of travelers and so despite competition as long as the travel demand of Hawaii remains (as you pointed out is a robust assumption) I think both will continue to do well.  

there is tremendous demand for inventory by both investors and retail buyers which is making it tough for the casual investor to succeed.it's great that you're thinking about getting your financing in order. 

Neighborhoods like Logan Square or Albany Park have seen growth in rental demand, making them potentially good starting points.

If your goals are long-term - this market will offer a ton of appreciation and steady renter demand.

You may also want to check the Columbus OH market - great macroeconomics with lots of job and population growth along with major companies developing here that drive strong rental demand. 

It’s known for its affordable property prices and steady rental demand, which makes it an attractive option for reliable cash flow.