Some of my competition don't even bother with Airbnb. 

But the diversification may be through a number locations of the same type property, as expertise in one area trumps diversifying into areas where you lack a competitive advantage.  

•Off-market deals: Creative strategies for connecting with potential sellers and standing out in a competitive market.

i think less competition is primarily going to mean less margin per deal. 

You want to focus on areas where you have a competitive advantage (you have lived there or you have family and friends there) and then compare those areas against widespread list of great areas to invest.Good luck!

That means that there is now competition between hosts and you have to give people a reason to book your unit over another hosts.

As others have noted credit unions are generally competitive on HELOC's. 

Smoky Mountains seems to be a solid choice but I wonder about oversaturation and competition in that area?  

Our tools are a reflection of our ability to rationalize...This, in turn, is where the competitive advantage is.Think about it.

Check Furnished Finder, Zillow, as well as AirBnb and VRBO (30+ day stays) to see what sort of competition is in that specific market.