The only issue we've run into is that before STRs were regulated in our city, the competition was so heavy that nightly rates were depressed to the point that they frequently fell below LTR rates. 

We simply got priced out in an uber-competitive market.

Getting it under market value would be a bonus.So, would using an FHA 203k renovation loan, which would allow me to buy something unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower.

Competitive advantage is something I’ve been mulling over a lot as well.Thanks again and I hope to continue the discussion.  

If that's not something you're comfortable tackling, consider partnering up with an experienced flipper until you have a better understanding of what your competitive advantages could be.

I found that I could get much better deals (with no competition) by NOT buying bank owned houses. 

Population explosion, positive business outlook, lots of cheap properties, less competition, nice weather

By improvements I mean keeping the house competitive in the market.  

@Cory MelickYes, MLS is harder because of the competition, or multiple offer scenario.  

Cash - While I can get an infinite return on a BRRRR, if I'm only cashflowing $50 a month, that doesn't leave me very competitive.