New investor in Southern California. Need help with strategy

[Elliot Saks]

Hi everyone,

I've been lurking here for a while, but haven't been ready to take action until now.  I apologize up front if this post is disorganized, but I'm sure there are other people who are or have been in my shoes and can offer guidance.

About me: mid-30s, high-paying day job, telecommute and somewhat flexible hours, married with kids, own a duplex in Los Angeles county.  I have access to some capital but probably not enough to invest locally.

I want to build an empire.  My long-term goal is tens of millions in real property and hundreds of thousands a year in cash flow, so that money no longer an obstacle in life.  Not just for my family, but even my community, if I can achieve so much.  I want to leave a legacy of philanthropy.  I'm already known as a generous, hospitable person, but I want to be the guy that can handle any need of any person I know at any time without wondering what the impact to my own finances will be.  I want to care for unwed single mothers and pay their childcare costs.  I want to pay the salaries of people who work hard to make their communities better when the community itself can't afford to pay that.  Enough about that.  We all have our reasons, these are just a few of mine.

You all know LA county and Southern California in general has insane pricing for real estate. Here's my conundrum. I have access to enough capital ($110k cash, $140k HELOC) to make some good deals almost anywhere but here. I'm considering starting out somewhere cheaper, but I don't know where to begin. I hear good things about lots of up-and-coming cities (Indianapolis IN, Mesa AZ, Madison WI to name a few), but I know nothing about those markets, the culture of those towns, the good and bad areas, or even how to find a good property manager over there. Since I don't live in or near those places, I have no idea how to find good deals in those places since I have no network there. Down the road when I'm more comfortable I can see myself going out of state, but I don't think I want to for my first experience.

If I'm totally honest, I'm probably too risk-averse to make my first property(ies) outside of comfortable driving distance (max 3-4 hours), leading me to look in places like the high desert (Joshua Tree, Yucca Valley, etc) or mountain destinations like Lake Arrowhead/Big Bear. I'm attracted to the stability of SFHs and duplexes with long-term renters, though I hear vacation rentals can cash flow really nicely if you get 60%+ occupancy. I'm open to either, or another option if that's more profitable. Flipping scares me because I don't think you can flip properties that aren't local to you, and I can't afford to flip properties near where I live. Not yet, anyway. Honestly I'm way more attracted to buying something distressed in driving distance, put some cash into fixing it, re-fi to 75% LTV, and then cash flow for 30 years.

What would you do if you were in my situation?  Anywhere other than So Cal I'm basically loaded with options, but here I feel barely middle class with zero options for investing.  I'm not willing to move because my family and community are here and frankly, we love it here.  We also have a newborn and would like to remain in our current home with her at least for the next few years.

I'm willing to get creative, willing to get my hands dirty (as in demo/construction, not burying bodies...).  I'm great at money/math/analysis (my day job, senior analyst with 14 years exp), and my wife is a very good creative with an eye for design/aesthetics.  We're both hard workers.  

I admit that I have much trepidation about starting this.  I'm working on getting over it, but need any and all suggestions for alleviating that fear when so much cash is on the line.  Thank you all for reading.  Best,

Elliot