3 homes in Knoxville or 1 in the bay area?

[Arpit Guglani]

Hello,

this forum has been an amazing fountain of information. I am a real estate newbie and have just purchased my first home to live in, here in Knoxville. I was wondering if you folk had advice on this situation:

I live in Knoxville and will likely be here for atleast a year or two. I will then move back to the SF Bay area to settle down, raise a family etc.

I have $300k saved for RE investment. 

Option 1: use it for a 20% down payment on a bay area home right now. Buy it as investment property and rent it out. We will have a negative cash flow of about $4k until we actually move in. 

Option 2: I am wondering however whether it would make more sense to deploy that here in purchasing three 400k homes in West Knoxville and renting them out. The rent will largely cover the mortgage. 

Option #2 would mean however that I would have to wait for an additional year or two after I move back to California to again save up a similar amount and I have FOMO about how much prices would have risen there. Having multiple houses in Knoxville would however create solid assets for retirement without negative cash flow and be less risky eg. If one property is vacant or I have tenant issues I can cover it financially easily.

Would your thoughts on this or if there is another more lucrative option I am overlooking. 

[V.G Jason]

If you're open to California laws/policy risk, then Bay Area.