What would you do with $500k? Buy your own house or invest?

[Uzma Abdullah]

Hello BP family - my husband and I are looking for some advice on whether we should buy our own home in Southern California (specifically Orange County) or whether we keep paying rent and invest out of state to build our rental portfolio. 

Here is some background information to help. We are currently a family of 5 paying $3,400 for rent in Irvine, CA. We need more space, so looking at rent around $4500. If we buy, we will likely pay around $1.2M, with roughly $400k down (in order to stay under a jumbo loan which max's out at $822k). 

We currently flip homes in Dallas, TX and have been slowly adding to our buy/hold portfolio. We are have the $500k lump sum that will be coming soon from selling some of our properties in Toronto. Because rent is so high here, does it make sense to buy and build equity this way (so we can eventually take out a HELOC and invest), or do we continue paying the high rent and use this to jump start our portfolio with larger multifamily residences (specifically in Dallas, TX and Bakersfield, CA).

Interested in hearing your perspective. Ultimate goal is similar to many...to reach financial freedom and generate enough cash flow so my husband can leave his W2.