Need guidance on Flipping VS Buy and Hold (Low money Investment)

[Lakshay G.]

Hello Everyone,

I am just starting out in real estate business and I truly am pumped to get my feet wet. I don't want to invest a ton (Minumum $2000 Maximum $8000) of money. For the last couple of years, I have been doing so much research (never enough especially for beginners) and have a mind set for buying and holding. But considering how flipping pays off way more in shorter time versus rental, I am thinking about starting off as a flipper and then do buy and hold. 

After speaking with a lender, it seems like it's harder to get funding for flipping than buy and hold. If I am buying and holding, why don't I just find a good realtor who can find properties that need some improvement and rent them out? In the first deal, is it recommended to take a route through a realtor, or a wholesaler, or personal direct marketing?

I am in Baltimore (not Baltimore city) area but also interested in rest of Maryland and Northern Virginia.

I know I may get many answers like it's all about what I want and it depends on me, I know it does but what has worked for others for their first deal? What I WANT is to buy and hold. I definitely can't afford to buy already built regular properties for sale as that will be out of my reach. Also, do all creative lenders require 20%-25% down payment? Should I even consider hard money?

Thank you in advance to the responders and thank you bigger pockets!

[Brandt Smith]

@Lakshay G. If you only have $2k to invest, wholesale or be a bird dog. You job is to build up a war chest. 

As for flipping vs buy and hold, flipping is a job, it is hard, and it is risky. It may pay $15 k per property, but you need to keep going or the money dries up. Also, you get taxed as a short term capital gain which eats up a ton of profits. It is good to build up funds to invest.

Buy and hold is an investment. It can give you the same $$$ as a flip but you need to wait a few years to sell. It pays you whether or not you are active. And the profits are virtually tax free.

As for lenders, it depends on your credit. If yours isn't great, start fixing it now. If it is good (and you have a good income) lending is easy.

I don't recommend using a buyers agent. You can do the same work by setting up some simple screens in your local real estate webpage (in Houston it is HAR.com). If you go directly to the listing agent, you double their commission. It makes you a much more desirable buyer for that agent.