I could see why renting by the bedroom with lower rent might be appealing. 

A few more seasoned investors have told me, perhaps controversially, that most cities place such onerous zoning restrictions and are completely inactive in aiding affordable house because lower income and lower-mid income residents are such a net loss to the cities, i.e. little tax revenue and big consumers of city services.

I attended one of this company's auctions last weekend just to get a feel for how these private estate auctions go, and it kind of went like this: auctioneer asked for an opening amount, no one bid, one of the auctioneer helpers bid it lower, then some people started chiming in, and it went back and forth between a few people before finally ending about 25% higher than the number the auctioneer started at. 

Hard Money is used to close quickly and in theory, they could have lower out of pocket to you if the numbers worked right. 

We ended up using a Navy FCU 7 yr ARM and bought an old colonial in the yachting village/ lower Thames.

Still, my walk away number is quite a bit lower than they're asking, so taking your advice, I'll probably continue to keep looking.

Time to lower the price. 

With the lower income, raising rents may be a slog. 

You'll need a much lower priced property with some value add or larger equity spread, and also have the funds to make the payments in case it doesn't play out so smoothly, or there's delays getting renters/lease-option buyers, etc... 

Spoke with many people on here over the last few months. I have yet to hear any input on thoughts for what works out better, what makes more profit, what makes loans easier to obtain when it comes to flipping a house ...