Choosing a strategy for apartment investing

[Aaron Jones]

Hi everyone.

I'm a mid-30's newb RE investor in OKC with 1 accidental rental, hoping to eventually acquire enough units to escape the rat race, hopefully within the next 3-5 yrs. I don't have a lot of capital to get started (maybe $50k if I sell my only rental, which isn't cash-flowing or appreciating), but I do have great credit and solid income. I've read a ton of books and listened to a ton of podcasts, and I have found apartment investing as the most appealing path to financial freedom. My dilemma is that I can't decide which acquisition strategy to pursue.

The way I see, I could start a couple ways:

1. Use hard money and the BRRRR method to acquire foreclosed SFR's and flip them into rentals. Do maybe 4-5 flip-to-rentals a year for the next 3 years. Then, in 3-5 years, 1031 exchange those properties into small apartments.
2. Look for master lease option opportunities now, with the intent to find value-add apartments that I can increase NOI and earn enough cash-flow to save for a down payment upon exercising the purchase option before expiration.
3. Take my $50k and buy 1 4-10 unit apartment now and save to buy more later. If I did this, I could probably get a decent 4-plex that would cash flow, but Id have to put 25% down, which eats up all my capital. Or, I go bigger and possibly structure a deal where I only put 10%, and have the seller carry a note for 10%. Problem with this is that paying off the seller-note would eat up my cash flow until paid (assuming a 5-yr note), so I wouldn't be able to put my cash flow toward the next property until after the seller note is paid.

What do you guys think? Which strategy makes the most sense for someone working ~50 hrs/wk with 2 toddlers? Obviously, each strategy has its pros and cons, just looking to get other's opinions.

Thanks in advance!