The same scenario would never play out this way the tenants you'll find in some of the less urban markets.

There are already electric hybrids that use very little gas.More are slated for 2014 - 2015.If gas goes any higher and stays there it could be a death knell for suburban areas.More people will move to more dense urban living where they can walk and bike to work to reduce costs to survive.Used to there was a small class of the rich,a big middle class,and a small poverty class.Now the rich class is bigger,the poverty is bigger,and the middle class is shrinking into non-existence.Costs are going to rise and keep getting worse and worse.I want to be on the wealthy side.In many instances it is getting cheaper for me to eat out then buy at the grocery store.I can get a 3 course meal at Red Lobster for 7.99 and get 2 meals out of it.The restaurants are not having to raise prices at the rate of the grocery stores because alcohol sales drive most of the profits.If people think it is bad now it is going to get much worse.We need to stop depending on gas for transportation.It's a dead resource on it's way out.

Eventually urban sprawl happens and your rental will increase in price.

In my urban market there are more MFH than SFH so resale of MFH is not really a issue... but I forgot about that being a factor.

This is one of those little niches in society that a big ugly biker can fill.

On the list is either bigger urban areas or smaller second home areas (just worried about the volume of buyers).

I imagine mostly urban markets for this kind of thing.

More in urban areas (25% of sold 1-4 in the last 12 months in Boston, MA) less in suburban (12% in Woburn, MA).So the "market rate" is more or less made up.  

I can see the added value of investing in the suburbs but at the same time (as a millennial) I am envisioning greater long-term opportunity in the city since most millennials prefer urban dwellings.I, myself, graduated a few years ago and still have some student loan debt, so I would prefer something that isn't terribly capital intensive.

If you look at net migration patterns especially the senior population that is in the tens of millions and more most are moving to warm belt states.Some urban core areas of cold belt states are doing well but the burbs and rural locations in a lot of those areas are dying off.I would not be excited about investing in such places even if the prices were low for long term success.Their are local investors in cold belt states creating legacies investing in those areas that never plan to leave but for an outside investor looking for a possible target market it doesn't seem to make sense.