Newbie considering a couple options

[Jeremiah Lee]

Newbie here, please go easy on me!

Let’s say I have $200,000 that I’d like to use to invest in real estate and I’m interested in a buy and hold strategy. I’m 33 years old, have a full time career outside of real estate and am trying to decide between option 1 or option 2?

Option 1:

Build Secondary Unit at my Primary Residence in California

-800 Sq Foot –Stick Built or Modular

-All in cost approx. $170,000-$190,000

-est. rent per month $1,500 as of today

-self managed

Option 2:

Put that same money into multiple SFR properties out of state-ave purchase price around $150,000

-likely through a turnkey property company like Norada or similar

-managed through property mgmt.

-assuming a newbie(key word) who completes necessary due diligence

Of course there are many variables and unknowns, but which option would come out on top in the next 20-30 years? Thank you for reading!

[Bob Okenwa]

@Jeremiah Lee

Most people would suggest that you get started closer to home so you can keep an eye on things and learn up close. With that being said, option 1 would return around 8-10% CoC if you include vacancy, insurance, CapEx, etc. What would your out of state returns be? For me I'd try to leverage that 200k and get as many properties as I could with it, but that's just my own RE philosophy. Your risk tolerance or appetite for acquiring multiple properties may be lower or higher. Out of state is no joke and you should spend a few weeks/months researching areas and getting to know the area pretty well before buying anything.