I think this actually happens all over the world, but some landlords will increase their rent to the amount that the US government is willing to spend on rent in that location.

If I purchased a home locally I’d have to ask well beyond the market rate on rent just to break even.

I am also open to considering opportunities in the Riverside / Five Points neighborhood, or San Marco, in Jax.Ideally, I would like to find a livable property with 3+ beds / 2.5+ baths, make use of FHA to purchase, and rent out 2+ rooms while renovating into separate, complete units.

I can only speak for Dayton - there's a lot of opportunities here with a market that has  high rents relative to the prices. 

Phoenix contains a rare combination of elements that have created an outstanding market for distressed property investments, including the following:Cost Savings: Distressed properties are sold below their market value and enable investors to take hold of properties at a trifle compared to traditionally listed properties.Strong Market Fundamentals: Being among the fastest-growing cities in the country, Phoenix ensures a high demand in housing and rentals, hence good potential for resale or income from rentals.Value Creation Opportunities: Most distressed properties need renovations; thus, such situations present opportunities for investors to increase equity by adding value.Population and Economic Growth: Phoenix remains among those cities in the country which are attracting more and more residents and business; therefore, this presents good, long-term appreciation possibilities of property appreciation and income creation.Challenges to ConsiderWhile the rewards can be great, distressed property investment is not without its challenges.

The tenant fails to pay their last month's rent and leaves the place needing new flooring and paint.

The smaller properties are still growing in terms of prices and rents - which have both gone up actually since covid. 

.: Does anyone have personal experience turning your property into a rent by the room with pad split?

Keep in mind, adding "cute", and upgrading things won't increase your rent or ARV past what the market in that area will tell you is the max. 

Quote from @Jonathan Blanco: Is it worth seeking lenders with $0 lender fees (such as origination, processing and underwriting fees) or do they just get that money by increasing rates and charging higher points?