I dont think you will ever drive from TX to CT, but if you happen to buy more houses for rentals. 

You should start with a general idea of price point and strategy, which should get you narrowed down a bit, then you'll want to look at job and population growth (City-Data.com) and get a feel for each of the markets, once you have selected a market you can go a bit deeper into sub-markets and unique details of the market as a whole.

No comments on this specific issue but reading your line : The neighborhood is now trendy and property values have skyrocketed and will continue to do so I imagine.Its easy to believe there will also be future growth and then the market shifts, neighborhood etc.  

@Michael Pitsos It doesn't appear that you're considering other expenses that will drive your negative cash flow further into the red such as capex, repairs, vacancies, management, etc.

Don't let fear of paying taxes drive your decision process. 

While there is a lot of growth happening around Blacksburg/Christiansburg, we're a bit uncertain of the areas outside that. 

“what do I do with the equity and cashflow for maximum growth?

One last thought: If separate property continues to maintain its character as such, all the income or growth of such property is also separate – as long as you keep it that way. 

Also big increases in value can push IRR further upon exit.I find passive investors with millions tend to be fine with 6 to 8% and prefer projects with equity growth long term and sponsors who are experienced for more safety.You as a sponsor do not want to do deals where the investors and lenders are getting some insane interest rates and money because it will set you up for huge failure. 

Does your PM drive good reviews and experiences for your guests?