Fix and Flip or Buy and Hold to Start?

[Evan Eldridge]

I am new to real estate investing, but have been researching nonstop for over a year now and am stuck in analysis paralysis due to inexperience and fear. I am looking to get my first deal under my belt, but am torn between starting out with a fix & flip, or renting out a property. I have $10k set aside for a down payment whatever I choose to do, which I know is not very much for a down payment, but I plan on purchasing a discounted / distressed property and possibly getting a renovation loan if I go with a fix & flip. I just don't know which strategy / structure I should go with for my very first deal. I understand the pros & cons to each option. Any words of wisdom from an experienced investor would be much appreciated. 

[Nathan Gesner]

@Evan Eldridge yes, you should take action. But I don't think you're smart to enter the world of flipping. It's nothing like you see on TV. Even the most experienced contractors I've dealt with have a nasty habit of discovering hidden problems that increase costs and delay completion. A hiccup like that can destroy your budget and get you under water quickly. Besides the risk, the reward is just a little more money in your pocket and then you have to start over again. That's not wealth; it's a job. You have to continually repeat the action successfully to make money. If you screw up, time the market wrong, or get a bad contractor, the entire thing can come crumbling down.

Buy-and-hold will build long-term wealth. You have to know how to evaluate the property and purchase smart so it's cash-flowing and protected from a down market. Even then, you need to educate yourself on the law, how to screen tenants, marketing, dealing with contractors, and a hundred other things. Or you can hire a good property manager to take care of it for you while you hunt the next deal. 

Long story short: buy-and-hold is far more forgiving of your mistakes and more likely to generate true wealth.