House Hack SFR or do Airbnb out of state?

[Dylan S.]

I'm in the Orange County, CA area and thinking of either house hacking a single family house or just rent for now and put my capital into an Airbnb/investment property out of state. I'm 24 with around ~70K to invest and make ~120K/yr from my job. Based on this, I'd estimate I can only qualify for a ~$500K house, which doesn't go very far in CA. There are some older houses in Long Beach area that I could get and house hack, but my mortgage payment would still be roughly $2K/mo after rental income from renting out a room. I realize there is inherent risk in that with misc. expenses/repairs and other items that inevitably pop up with homeownership. My plan would be to house hack for a year, then move out and rent out the whole place. Additionally, I could offset some of my taxable income with deductions from home ownership.

Alternatively, I could rent locally for around $1200/mo and put my capital toward an Airbnb/investment property out of state. Specifically, I'd look at the Tempe, AZ market as I'm familiar with the area. The barrier to entry in AZ is obviously much less than CA. I'd assume I'd have to put 20% down if this is solely an investment property, which still should be ok. I'm unsure if I do go this route if it would affect my ability to qualify for first time homebuyer incentives and if that's worth considering.

I've been thinking about this for a while, but have gotten cold feet with the recent uncertainty in the market and this being my first property. I'm hoping to take action this coming year but don't know where to start. Curious to hear what would you do in my situation? Any advice is greatly appreciated!