Buy/Hold or BRRRR for Active Military?

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Hello BP,

I have been researching for about nine months now and have pretty much boiled my options for my first RE investment (besides my home) down to either straight Buy and Hold or BRRRR. I would love to hear some opinions or stories that may help me make this decision....

My Situation

I'm active duty military with a wife and two kids. I have been dedicating 10-15 hours per week to study and research REI, and i think that may be the most I would be able to put towarss property management/rehab each week. I own one home (VA) and want to purchase a multifamily investment property. I have $20k to use for down payment, cash purchase, rehab costs, etc., and want to use it to kick start a real estate business.

My Freedom Number

In fifteen years, I want to have $5,000/month in passive income from my real estate portfolio. At $100/month/unit, I need 50 units by that time, which is only an average of 3-4 purchases annually. This is my Freedom Number.

Option 1: Buy and Hold

This seems like the best option. Most people I talk to have recommended this because it's very passive, and won't require as much time (as compared to a massive rehab). My concern is that if I use the $20k I have to invest on one "turn-key" Buy and Hold property, that cash will be locked into the mortgage for at least 3-5 years until I have the equity to cash-out refi. Also, presuming 1% increase in value annually, that's only 5% over that time. Although the value of the house increasing is a bonus and not really included in running the numbers, it is a consideration. I want to be able to scale this into a multi-property business, but I don't see how I can expand at all with this stategy.

Option 2: BRRRR

I think that value-added investing is the best way to invest, and that's why I want to do this strategy. I would like to be able to buy a distressed property and add value by rehabbing and refinancing, get my initial cash investment back, and invest in another property within a few months to a year. The problem with this strategy, and the reason that most people have recommended that I not go with this, is because of the time required. Now I do not have a problem with investing my time into this business, but I do have my family, so I can't work 120 hours per week on my job and real estate. I can do this one of two ways...

1. Take leave from the military for 30 days to do nothing but rehab and hope I don't go over that time, or...

2. Pay a contractor to do the entire rehab and just monitor/manage.

My last concern with this is if I take my $20k, add that with say $10k of private funding and another $5k of crowd or institutional funding, I will have $35k for the entire project. This seems like a lot, but not when I have to pay a contractor from start to finish... 

Thoughts?

I am split as to which strategy to follow. Bith havr their merits, and both make sense to a certain extent. What shoukd I do? What would you do? What did you do?

I would love to hear your thoughts... and thank you in advance!

Sincerely,

Austin G.