They tend to have higher and more costly turn over rates and tougher tenants.

@Ryan Jenks  instead of going laterally go vertical come up to Oregon.. you can get 5 to 7 caps ,, 7 are tougher to find but they are doable. and no management headaches.as for the wipe out in Memphis.. they bought a 40 unit... for 8k a door it was 70 % vacant... broker feeds them a line.. that they can get it up and running and sell it for 40k a door.they proceed to dump 600k into it... so just under a million .. and were planning on making about 500k on a turn aroundWell that tenant base in Memphis that is D class you simply can't do from a far.. first managers are stealing from them... few murders.. and other violent crimes..

I'm a buy and hold guy, but the cash on cash deals for buy and hold are tougher to find since everyone is moving here. 

As the market gets tougher for quick flip candidates I would rather slow the pace down and make more on each transaction (through tax savings) than have to go out and actually hustle.  

Reserve requirements and max LTV gets a little tougher after 4, then after 6 reserve requirements get tougher yet, and a minimum FICO requirement is tacked on. 

James,reading @Jonathan Kelly response, some times it is tougher to find individual students and a lot more paperwork, most of the times it's a group of students that rent together.

 #3 is the tougher one.  

I am betting it is tougher to find good deals here in ca compared to va.

I don't at all agree with the assessement that flipping or the fact that Memphis has a lot of turn key type companies is keeping folks from owning.prices have not shot up there like other areas.. they are consistant and you can buy any number of thousands upon thousands of homes for 120k or under and in todays interest rate environment these mortgage payments plus tax and insurances are the same or lower than rent.the issue in these areas is simply demographics.. and as stated the perception that many have they don't want to OWN homes.. homes in non appreciating areas like these are liabilities to the homeowner .. easier to rent and let the landlord fix everything and pay the taxs and insurance.you have a huge amount of the population that will NEVER qualify for a mortgage under todays guidelines.. this started changing in 02 to 04.. when I first started lending in Memphis and in the deep south my vendors were all flipping to retail.. then as credit got tougher they found this new thing called turnkey it also ran parallel to the real estate value run up in CA and other high priced markets.. when high price markets no longer could hit anywhere near the 1% rule..

A little tougher to make the deals work, but I want to invest locally.