New Investor: House Hack vs. STR

[Pearce Trenary]

I am a new investor and have a goal to start building my real estate portfolio full of cash-flowing investments. As a first-time buyer I know there are a lot of incentives to buy a house however it would not apply if I got an STR. I have put my two options below and I would love to hear your opinion on which you believe is the best route to go.

Option 1 (STR and 20% down): I have found a great location for an STR that should have a COC return of roughly 37% based upon all the data I have pulled. I also think this area will grow over the years. I plan on self-managing and have a mentor who has provided me with the tools to do so. However, I would have to put 20% down which would take the majority of my investing cash.

Option 2 (House Hack and 5% down): I could put less money down into a house or duplex and house hack in Orlando (would be LTR as the area we will be in is strict on STR). Then I would hopefully be able to get a second home loan and put 10% down on a STR in a year.

Question: As a first time home buyer is it best to buy a house and rent out a room to friends which would enable me to put less down or should I put 20% down on a STR that I know will cash flow very well however it will take a good bit of my investing money? I do have a decent job so I would not be in a bad spot by investing the majority of my savings