My long-term goal is to grow a portfolio of income-producing properties while building strong local connections. 

I am not personally adverse to negative cash flow if the property is expected to produce a good return, but negative cash flow can get old fast.  

Fortunately, we don't have a financial crisis, and it appears that home prices are stabilizing, though well off of their 2021-22 highs.I think this is healthy. 

Even strong sponsors often underestimate the operational drag or local market friction that erodes returns.REITs, when analyzed through the lens you mentioned — as diversified, income-producing property portfolios rather than speculative equities — can absolutely make sense, especially for seasoned investors looking to reduce active management and preserve liquidity.

So everything we tried was filtered through that lens.When it came to Facebook ads, we found they produced plenty of volume but very little real intent.

It is because relying primarily on cash flow for return does not produce the type of return that interests most investors that are potential LPs (typically high net worth individuals with large amount of money to invest in potentially higher risk/reward investments).  

As Nicholas said, I wouldn't expect cash flow to produce what you need for more units, but it can help you build your down payment for the next one.

FIFY“agree the midwest is best for INITIAL cash flow and cost of entry.”Historically these Midwest markets have produced poor long term cash flow.  

I'd rather buy a $600k cabin producing $100k in revenue than a $300k cabin producing $30k. 

There are killer markets on the coast such as Pinellas county that can yield insane results, but you need a significant amount of buying power and cash on hand to produce the product that is requires to excel in that market.