Then you can leverage that real estate for different types of loans. 

What are people looking for in terms of ROI on this type of investment?

A good manager can keep a mediocre investment successful; a bad property manager can destroy a good investment.If you find a good PM, they will tell you which neighborhoods and property types work best for the market.

@William Brock I can't say specifically how well these do, but we have lent on numerous VRBO type properties on Canyon Lake recently, and those borrowers seem to be doing well, so other investors are doing just what you're talking about, for what it's worth

It would mean giving up that benefit and spending money for little gain when you step up to those types of investments.Of course, every situation is different.

I would set appointments with local investor/agents who are tapping the market you want to serve (just look at closed multi-family listings and see who sold them), and keep doing that until you find a person who stands to mutually benefit from coaching/mentoring you and expect to pay them a split to work alongside them until you're prepared enough to go on your own. 

I see too many niche STR investors looking to build abnormal property types in rural markets and they have an impossible time refinancing out of the deal. 

This type of money is generally used as a bridge to go from acquisition to stabilization where conventional options become available. 

@Ben FrenchYou can find more expensive notes in major cities but two things typically occur with these types of assets.First is you will pay more the note and second is the borrower is significantly more sophisticated and will also employ a legal team and fight you tooth and nail to keep the property if it does have value.

For older demographics, consider the availability of medical centers, entertainment, and restaurants.Buildings/Permits: Assess the city's growth compared to previous years.Determine if the city can accommodate future supply.Government Regulations: Examine the city's efforts and the type of businesses they are targeting.