These factors help create a ceiling effect--where, no matter how much the house is worth, there's a limit on how much you can charge in rent.And, as you mentioned--if leverage is involved, the debt service of a more expensive property often overshadows how much you can charge in rent.These factors contribute to rent not increasing proportionately with the price of the house (and there are probably other factors too, that I'm just not thinking of at the moment...haven't had my coffee yet).Having said that, there are some extremely niche markets with rental properties that cater to multi millionaires, and which are extremely expensive (certain areas of LA, for instance...probably the French Riviera --where there are probably lots of transient tenants worth tens or hundreds of millions)...but, those types of markets are obviously the exception to the rule...Good luck out there!

I'm looking into buy and hold properties but not sure what niche is most appropriate yet for my area and situation. 

Targeting a specific niche will help as well.

The best way to find new clients in a particular niche is to network with people of that niche. 

I paid for a consultation with a colleague who was the IRS technical advisor on code 469 for 25 years to offer some feedback and clarity because it is so unique. 

I am in the land niche and that is all I do...

I am a land niched investor.

When there is an opportunity to make better returns in one niche, money will flow to that niche until supply overwhelms the demand, and the return in that niche comes down to the average of the rest of the market.

It's definitely a unique strategy for unique situations.  

If you are considering them in this market environment, they must have some uniqueness that is worth considering.The asset and market are important but the operator and how they manage the project are critical.