First property options; which seems most reasonable?

[Joshua Fowler]

I have a bunch of ideas of how I want to begin building my real estate investing portfolio and I'm having trouble choosing which option to pursue first. I think it would be appropriate to lay out my long term goals, as that influences how I begin my real estate journey.

- Replace my monthly W2 income with passive real estate income

- Pay off my parents mortgage

- Have $1,000,000 net worth (what a small minded goal right lol)

- Employ at least 3 family members with my property management firm

- Eventually retire from a W2 job and become a full time real estate investor

My options for my first property are:

1. Build and rent out a duplex on lot that my dad owns and will sign over to me whenever I'm ready

main pros: the land is free and my family grew up in the neighborhood so I'm familiar with the area

main cons: the area isn't in the best shape, with many abandoned and poorly built/maintained houses surrounding my property. I don't know how much I could charge for rent and also how attractive the property would be due to the surrounding homes 

2. BRRRR a foreclosed property in the metro Atlanta area

main pros: I'm confident that I could secure financing and I'm confident that I could renovate in a short time-frame with minimal expenses (DIY with my dad and uncle for most renovations)

main cons: I've never done this before so I'm not sure if I would choose a property that would generate a satisfactory ROI 

3. House hack and BRRRR a $100 down HUD home

main pros: $100 down

main cons: I would be tied to this property/location. I'm 24 and just 1 year into my IT career, I don't know where I could be in the next few years and if I would still want to be tied to the city of Atlanta

These are just pros and cons that I've identified myself with no real estate experience. If you could think of any other factors that could help influence my decision that would help a lot.

[Daray Olaleye]

@Joshua Fowler

I think the first goal should be cashflow. Once you have achieved passive cashflow that exceeds your expenses then the other goals would be that much easier.

With that being said, depending on your goal timeline, I wouldn't recommend any of the options you've laid out as your first deal. Partly becuase you wouldn't see cashflow for a while dealing with building on land, renovations on the foreclosed property, etc and also partly because it's your first deal and unless you or someone willing to help you has direct experience you'll be shooting in the dark with no gauge on what is feasible and what is not which leaves lots of room for error. 

I would hate for you to be scarred on your first deal only to never return to real estate. 

House hacking a stabilized property (a bit of your 3rd option) could drastically reduce your taxes, eliminate your living expense entirely, and create positive cashflow from your tenants and the extra cash you would keep from not paying a living expense. You could create significant cashflow with just one deal. 

From there you could set your sights on something greater and start knocking out some of your other goals.