If you had more experience in construction and/or rehab, my suggestion might be different.  

Any suggestions on where to start?

I'm not suggesting that they are, but I'm curious as to the market forces you are witnessing that would cause you to say that.

I might suggest checking out smaller cities in Arizona outside of Phoenix. 

I might suggest looking at parts of Arizona as its closer and just about as affordable. 

I not by any means an expert, but I would suggest having alternative outs planned for anything you might buy for a student rental in case a project doesn't pan out.I've recently found the Tallahassee Investors Network and those guys put together a great gathering once a month that I'd highly recommend you make the trip over for.

As a contractor it's an easy gut/renovation then off to section 8 rental.NJ market has not recover fully like NYC soI suggest you take advantage of it.

The article above suggests that rents are increasing faster than prices, which would lead to increasing cap rates.

Any suggestions would be greatly appreciated.

Since it seems like you are not quite in the area yet I would suggest following the Pittsburgh forum and setting up keywords for areas you are interested in.