Sell my CA Home, get $100k to invest into cashflow multi-family?

[Vitaliy Merkulov]

I listened to Thursday's BP podcast #238 where guest Michael Swan talked about selling his condo in San Diego and buying a multi-family cash-flow property. 

I own a house in Sacramento, CA where I live, I bough it for $225k 4 years ago, now my realtor says he can sell it for $325k in one week. 

What if I sell my house, get ~100k and use it as a down payment for a multi-family cash-flowing property out of state. 

Any thoughts, where should I start? Any gotchas should I watch out for?

[Aron D.]

Originally posted by @David Faulkner:

If you want to cash in the equity rather than renting it then go ahead ... but I would NOT invest the money out of state. Out of state is where CA equity goes to die ... you give up your control over your investments and have to be 100% reliant on others to make or break your investment for you in a market you are not familiar with ... this jacks your risks way up. Those risks become even more pronounced in a downturn ... I've seen that story play out way too many times.

I wish I would have seen this earlier from David, since I invested in a note purchase promising 9% return.  It was supposed to be low risk and was even recommended to the company by my Solo 401K provider.  The company stopped making payments after 18 months and I had to spend countless hours of my life doing a deed in lieu of foreclosure and got ownership.  The property had 2 years of back taxes (school, borough) and 2 years of back payments for utilities.  Some of the taxes went to collections and I had to pay those, plus attorney fees.  In addition, the property was in bad shape as it needed new roof, plumbing, flooring, etc.  I will never invest in anything that I can't drive by as you will get taken to the cleaners if you aren't face to face with contractors on repairs.  I recommend keeping the property or pull out equity and find a good deal near your local area.