Best Way To Start In a High-Cost Location

[John Schofield]

I've got a decent sum of money that I'd like to deploy into real estate. I've been listening to the BP Podcast and reading real estate books for a while, but I'm having a hard time figuring out what direction to go. Here's my situation:

• I have a job, and I like it, so I'm not looking for a real estate investment that would take up as much time as another job. That leaves out wholesaling and flipping.
• What I'd really like to do is buy-and-hold investing, but Los Angeles doesn't seem a good environment for that. There are some decent cap rates about a three hour drive from my house, but I'm not sure as a new landlord I should be taking on something that far away. (I've been looking at duplexes and triplexes on LoopNet.)
• That leaves me with investing somewhere even further (Texas, Arizona, Nevada, etc.) but I don't think investing somewhere that far away, as a new landlord, is a good idea.
• So buy-and-hold seems to be out. That leaves hard money lending. (Am I missing something?) But I haven't seen many posts or books about being a hard-money lender, and that seems like a field where ignorance could really cost you.

Any thoughts from anyone? Suggestions for where to look for further information? I'd love to hear stories from people who have been in my situation. I'm open to any suggestions for a niche to dive into -- commercial, residential, hard-money lending, etc.