The high carrying costs are compressing ROI further each month that passes (and likely driving it negative). 

With margins so compressed in California, I was wondering about other out of state markets. 

Rich, like the local hardware shop before Home Depot arrives in town, I think the answer is yes and no.As Jay notes below, margins will compress.

Felt is Non compressible.

Cap rates are quite compressed 4-6% in the larger markets and people in the smaller markets seem to be trying to get the same thing.

Cap rates are so compressed in the hottest markets that a smaller market with a larger cap rate will produce the same return with less competition to get in.I've done a lot of research on smaller markets with Census Bureau data, but it's not especially current.So now I'm looking for and analyzing the most current data I can find that covers all or most US markets.

I'd prefer one NNN tenant, as piecing together several tenants in a compressed time period could be tough.My current thoughts and questions:1) Where would you put listings online?

Diesel uses no heat, it is purely compression-based.

Okay, lesson learned, but "compression" is in my genes, if I get into another business, I'll probably do the same thing.

Water systems can be tested with compressed air.