@Jeff SkinnerRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Giving the best quality of service to people is the top priority! 

My suggestion is to buy a property worth more than $1M since anything cheaper for 4-plex will not be high quality.

Also, SAAS platforms are supposed to include support and service (that's the last S), but the quality varies greatly from company to company. 

With $4+ million in equity, you could conservatively leverage your replacement property(ies) and generate strong passive cash flow from high quality NNN assets.

You might find that installing a mini-split system, properly insulating, and ensuring the finishes match the main home’s quality will make a difference in how the appraiser views it.

@Adam OrtizRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Investment quality is all that matters as you build the foundation for your track record.

This cushions potential value drops.Syndicator vetting: Only partner with syndicators who have a strong track record in different market conditions.Market and asset class knowledge: Understand market cycles and the specific real estate types (multifamily, industrial, etc.) you're investing in.Avoid chasing trends: Just because a market or asset is “hot” doesn’t mean it’s solid.You’re right that this approach doesn’t cap your upside, quality diversification can still generate huge returns while managing risk.Best regards,Drago

It depends on your financial strength, the quality of the property, how many properties you own, etc.I like to start with one significant expense and three months of vacancy.