Down payment and closing costs considered, I am looking to deploy $40k - $50k maximum as an initial investment.The potential exit strategies I see are:1) 1-5 year exit: after living in the property for 2 of 5 years, sell to capitalize on capital gains tax exclusion on up to $250k. 

If your goal is to own several properties free and clear by the time you retire and you are unhappy with the performance of your current rental, my recommendation would be to sell the current rental and reinvest in a more profitable investment property via 1031 exchange.There are several reasons this would be my recomendation, but the ability to forgo paying capital gains taxes from the sale is definitely a big one.Also, if you have 17 years left until retirement and 7 years remaining on your mortgage, you’re more than on pace to meeting your goal with that property.So, why not deploy that capital somewhere that will help your portfolio grow?

Hey Everyone,I live and work in the San Francisco Bay Area.Houses here are expensive (relative to many other parts of the country) and require significant amounts of capital tied up in a down payment.I was looking to get pros/cons on: 1) buying a house (condo,sfh), renting out other rooms while living in one of them2) staying in a rental while deploying capital towards RE investments OOS and locallyIn several BP podcasts, and from RE moguls like Grant Cardone, renting is often touted as the better of the two options for an investor.

I bought a single family home in Virginia 3 years ago as a primary residence and am currently selling it so I can take out what little equity I have to re-deploy in a REI friendly market in the upcoming months.  

Then a few years later we had a son and I deployed a month later.

With the liquid cash that you have, one of the easier ways to deploy it would be working with a turnkey company.

We will then re-deploy this nontaxable capital into a new purchase.

They will be a proven expert not just at "oh, let's do this BS index fund and get oooh-aaah 6%" no, they know how to leverage, strategically deploy, how to get your $ COMPOUNDING!

But if you focus on good deals and can deploy at 30%, 40%, 50%, etc. then feel free to let equity get "stuck".Any investor should be happy to realize such great returns. 

Hi Stacy:   one option would be for you to partner with another investor who has capital to deploy.