Pre-Qualified by Lender in Los Angeles $800k. How to Start REI ??

[Sergio Avina]

Hello BP Community:

This is my first post on BP.  I humbly appreciate you reading the below question. 

Seeking expert advise on how to best start REI. I live in Los Angeles County (Whittier) and am interested in investing in SFR or MFR in the local area or Chicago (Berwick/Cicero area). Open to all possibilities (house hacking, rehab, etc). This month (Feb '17) I was pre-qualified for $800k (FHA 3.5% down), either SFR or MFR (based on W2 job). For the past 45 days I've seen 20+ properties with my realtor (and on my own). Currently rent a townhouse in Whittier. I'm inches away from pulling the trigger on a purchase. Some questions I self debate include (among others):

a) Should I purchase locally or out-of-state? Local market is nearly as high as '08 levels. 

b) Will i miss the appreciation opportunity in out-of-state deals (Chicago) by purchasing locally?

If you were me how would you begin in the real estate market?

Thank you, in advance, for your responses!