Nate, congratulations on being able to set aside enough money to start your investment portfolio.If your investment area doesn't allow you to buy a suitable multifamily with your available funds I would lean toward your second hand option.

Find a local wholesaler and see what they have available.

Just as a side note - Tacoma, WA is flooded with investors looking to rehab properties and it is very easy to assign a contract on a house that is available in most parts of it (including the area this house is in).

Grateful to have your expertise available to me!

They give you a script on how to increase your credit available to you.

In the Sacramento area the best way to search for properties in a precisely targeted geographical area (that I am referring to here as a "mini market") is to have a local real estate professional build you something called a Client Portal.The Portal has a feature (not available to the public yet but capable of being created by a local real estate professional for their client) that lets one select an area drawn over the map with up to 6-8 sides that precisely outlines the area or areas within which you wish to search.They are free to set up, you can have multiple searches, and they are readily accessible 24/7.

I do have a tool available specifically for investors that searches for properties based on cash flow, equity, and other criteria.

I have been doing due diligence for properties available in my area based on the 50% rule and $100/door cash flow.

Check your local real estate commission and see if they have contracts available usually they do.

Wherever you choose to invest in REO's be sure that you know your market very well and work with a local agent to be up to date on the latest available listings.