House Hack or Long distance on first property?

[Brock Pellerin]

Hey everyone!

I currently live in Orange County, California and my lease on my apartment ends this fall.  

I am currently looking into two possible scenarios for my first deal, they would require roughly the same down payment if I do a traditional on scenario 2.

Scenario 1 - House hack

Most of the small multi-family in Orange County run at $800k+ which would be a down payment of around $30K + repairs, with an FHA loan would be about $5K a month mortgage. After looking for a bit and running some numbers, the best route seems to be for me to get a triplex or a quadplex which would produce the lowest cost for me after all the rent from each unit. My goal is to have less than $1500 leftover for me to pay since having my mortgage covered completely would be difficult in my market. The ideal goal is under $1K

Mortgage - rents from 2 units = my cost

Target - $5K to $5.5K - $4K = <$1500

Goal to own this property for 2-3 years, which would result in $5K * 24 months = little over $100K equity. Then either sell the property or move out depending on if it would cashflow or if I wanted to use that equity to buy more properties. Between that and saving I can have about $200K cash in less than 3 years, it would just be difficult to buy another property during that time, I would just have to get creative.

Pro - quick equity building

con - no additional cashflow

Scenario 2 - Out of state 

This route is a little more straight forward but I would look to find a market, which I have already done a good amount of research, and start off with a single property, shoot for $200 + cash flow and buy a second property within a year of the first

Looking at houses in the $50K to $150K with $10-20K in repairs, the less the better for my first property

pro - start to build monthly cash flow which would result in buying the 2nd, 3rd, ... property quicker

con  - slower equity build-up and would still be paying rent for my personal residence

I would love to know everyone's feedback and advice on which route would produce the best long term wealth.  My initial thought is to house hack, but I can see advantages to both.

Thank you all in advance,

Brock