Debating Proper Strategy for a Beginner

[Luke Ezzo]

Hi all, this is my first post on any forum! I’m a new investor based in Chicago, but willing to relocate to nearly any city in the Midwest. My long-term goal (10-15 years) is to own cash-flowing 20 door+ multifamily properties as a form of (semi) passive income. I know that to get there I need 1) more experience and 2) more capital. I also understand that the real money will be made on the 3rd, 4th, 5th+ deals, so my primary concern is getting started, getting experience, and making a little cash on my first investment.

My initial strategy was to purchase a light value-add dup/tri/quad that is selling at a discount per key to FMV ideally with rents below market. Hold it for 1-3 years, fix it up, raise rents, and sell at a profit. For the last ~month, I've been building manual comps (both income and expense) for dup/tri/quads in a single market in the Midwest to underwrite my own deals. That said, through conversations with brokers in the area (and evidenced in the comps I've created) I've learned that this strategy may be slightly outdated as most properties are currently at market rents given the current rental environment, expenses aren't a realistic lever to rely on to add value, and there is a real risk I get priced out of the market by buyers with cash, 1031 exchanges, and with longer term hold strategies willing to pay an extra $10-20k per key.

When I explained my goals to this broker, he suggested I flip a SFH to start as it will accomplish my goal of magnifying capital using leverage (5% conventional down) while giving me experience. I've started to consider pivoting my strategy in the spirit of "failing fast," and figure that in 2-3 years I could conservatively do 1-2 flips and then 1031 that into a larger multifamily property and try to execute my original strategy.

What would you do if you were in my shoes? What advice do you have? What do you think of my initial and long-term strategy? Any input is greatly appreciated!