In our experience, rooming houses tend to serve very specific demographics, such as:students - we operate a rooming house which serves international students attending the local universities;{a specific} work force:  It is not uncommon to find rooming/boarding houses in close proximity to major employers (factories, hospitals, fish plants; etc);seniors:  A rooming/boarding house which serves seniors;the displaced & transient:  Rooming houses which serve those on the fringes of society (mental illness, transient, addictions).The population you serve will very much dictate the type of operation you will run and each comes with its own management challenges and rewards.My third question is, "Is this rooming house compliant with local zoning and bylaws?"  

For example, a nice 2/1 duplex in a fringe area (C area), is going for $120,000-$140,000.

I would look on the fringes, in other words if the houses are selling at 120k on one block an much less on the next find houses on the border.

I've had to use my chevy to pick up fringes, stoves, flooring, demo debris, and a plethora of all sorts of stuff.

Plenty of gentrifying neighborhoods to buy on the fringes of.

@Mark Brennan - This may seem like an obvious answer but why not buy a new fringe? 

i know 2 guys did free pre "foreclosure counseling 15 yrs ago "we buy your home types, who essentially were buying from owners at cost b4 banks got involved or at even if involved on the "last chance get current" , they rescued lot homeowners, and got good low priced deals, structured them with fringe Benefits like had pay off sellers car once,  or credit card, but got the property cheap, fixed up rented or listed it, or re rent own it back to previous owner, and this went on for 7 yrs till state found out made them stop, broke em up, now one had get broker licensed, one is prop managment co, etc.  

Here the best appreciation is on the fringe neighborhoods that eventually get gentrified, but those are also the neighborhoods that get slammed in a down turn.  

So if they're happy with 6% cash on cash and being in the fringe areas where there is a lot more risk, then I guess you should keep feeding them what they want.

The Transgender Studies thing is obviously a joke it is absurdity but it is becoming less fringe as I am sure you are aware.