Whether you're best at finding great deals, funding projects, or rehabbing, I'd love to find out how our skills and resources could compliment each other.

Also, when he brought up the notion of starting a business, I believe he had in mind an ordinary trade or business like selling widgets or providing services.

Your instinct may have been pretty good so far but only by pure luck not skill.

Yes, there are risks to investing local, all investments have risk, but at least there you have some control to correct your mistakes and learn hands on from them.As for the CAP example ... yes of course there are more factors that were not covered in the simplified example, some to the advantage of the high CAP market and some to the advantage of the low CAP market ... text books could be written on all those differences, but the point is that a skilled local operator can select a property and investment strategy to make lots of money in either type of market ... just because there is a low CAP rate does not mean your total profits will be lower, just like having a high CAP rate is of no assurance that your profits will be high.

You could consider a trade.

Once, we got over our control issue, it was a no brainer to trade up, so to speak.

As an active investment, it is the investor's knowledge, skill, and hard work that maximizes returns and mitigates risks.

CA rental properties trade in low single digit CAP rates (down to 2-3% or lower in SF area).  

Sometimes you just have to suck it up and sit on the sidelines for a while.I worked around it by partnering with some folks and we use their credit and income to buy houses and my skill set and some of my cash. 

I previously posted and vented on how much of a scam this service is on several threads and under their other trading names.