Local vs Out-of-State SFR/Multi-Unit Investing

[Sandeep Gandhi]

Hi All,

I am new to BP - and fairly new to Real Estate Investing itself. I have only bought one condo - about 6 years ago, rented it for the first 4-5 and have since moved into it.

I am looking to invest about $250k into real estate - and am torn between focusing on local opportunities (I live in the SF Bay Area / Oakland) versus out-of-state options (via Roofstock, for example).

I realize the numbers don't look great with local options, but I am also quite apprehensive of investing long-distance as someone who doesn't have much (if any) experience managing a rental property, has never worked with property managers, and has no experience with managing rehab work. 

I am currently reading David Greene's book on Long-Distance REI - and that's helping me get an idea of what kind of questions to even ask agents/PMs, etc., but I'll be honest, it all does feel quit overwhelming at this point.

That said - I do like the idea of learning to invest long-distance - coz it frees me up to move anywhere and I don't need to be based in any particular location.

Given the above, I am hoping to get some advice on how to choose between the two options I am considering below (assuming a 5-10 year horizon):

Option 1: Invest in a local Bay Area SFR / Multi-Family. It is likely to start with being a neutral cash-flow investment (at best), but my hope is that appreciation will be high enough to make up for the low cash flows.

Option 2: Buy out-of-state (multiple SFRs, or a single multi-unit). In this case, I will have to figure out where to buy, and also find a good agent and property manager I can work with - but the investment will hopefully be cash flow positive right from the beginning. I plan to only consider decent-to-great neighborhoods, in the hopes that that will mean the investment is relatively low risk, while also likely to appreciate more.

Any advice / pointers on how to think about / assess the two options would be much appreciated.

Thank you!