We're also starting to scour other forums for possible investments outside the traditional MLS sites, and other areas like upstate NY. 

All of the above and there are many discussions and mathematical gymnastics that are in these forums that prove it works and doesnt work in both ways...consider a first position heloc if you want to utilize velocity banking concepts for mortgage purposes.I got one with CMG mortgage (they call it the All in One Loan) and it put me in positive light. 

You are better off finding a solid property that needs light cosmetic work (paint, floors, or maybe even a kitchen or bathroom remodel), buy it at a decent discount and put 25% down or more (this is when you get best rate terms). 

On the other hand, if you're aiming for long-term rental properties, getting prequalified with a lender specializing in traditional loans or DSCR (Debt Service Coverage Ratio) loans is key.

Hey @Brandon Toron,Given your plan to turn the property into a short-term rental (STR), you have a few creative ways to push closer to that 90% cash-out goal, even if traditional lenders shy away from it:1. 

All for a sign as long as the property looks occupied...leave shoes near the front door, have exterior lighting, and at least a RING camera. 

And my new MTR tenant demanded the beds get maid and there was no hangers in the closest.. my last tenants must have stolen them.. then they wanted stuff moved from the garage which I told them thats enough I will give you your deposit back and you can go find another fully furnished home in Vegas I am not doing anything else.. they backed down but I know they are going to be whinny this after the last 6 or 7 tenants never heard a peep.. properties needed just light cleaning at turnover  etc.. so some good with some bad it happens.

What are the challenges of passive investing as opposed to traditional real estate investing? 

This is not a great return, but not terrible.As others noted, there are other risks, like having the property insured at full replacement or purchase price, or if the option is 100% seller financing with no money down or very little, versus 20% traditional down payment, this can start to move it into a better investment.

The problem is: A traditionally financed low-down payment house-hack with traditional long-term rents simply won't cash flow during occupancy, or after, in many MCOL-HCOL markets in the US. 95% leverage at even 5.7% just won't work in a lot of cases right now.