Looking for advice on the road to REI success

[Derek Gibbs]

My wife and I just sold our house and will use the proceedes to invest in real estate.

We have considered two scenarios. One is to flip some houses to build up capital. The other is to invest in MF right away with what we have. Whichever path we choose, we would have to live there.

We found a high end house in an amazing neighborhood that is in terrible shape. Every house around it is beautiful and sells for much higher than the asking price of this house. We are figuring on 6-9 months for rehab at a cost of close to $100k. Between the buy in and the rehab, we would be maxed out and just be able to get it done. If there was an emrgency, we could probably get a loan from my 401k but only as a last resort.

We have also seen some MF properties in terrible shape but in great areas and we were planning to try to purchase one buy calling the owner and asking if they wanted to sell.

We are leaning toward the house, but... Are we being foolish? We rehabbed and sold the last house but that was our first one and it was about 1/3 of the value of this house. We really want the experience and there is potential to make a good profit giving us a much larger amount to put on a MF property when finished. Or, should we not wait and get started in the MF business sooner?

Thanks for the advice!