If a fire occurs and they lose everything, very few have a savings or emergency fund to cushion the blow.

There are a lot of ways to get into real estate, but flipping is probably one of the more risky ventures for a first time investor without a strong cash cushion.  

Also it a fluctuating industry so I think real estate would be a good bet for cushioning when I eventually get laid off.

[I have had a roof leak (insurance covered, but still need to pay deductible), AC stolen (insurance covered but still need to pay deductible), tree fall onto my tenants car (turns out to be an "Act of God" but still paid the gardener to cut down the tree), and a tenant trash my place during an eviction.]If I didn't have a positive cashflow on my properties and used it to build a healthy cushion, these situations would have been more stressful.It's also important to look at what are you including in your expenses to calculate the cashflow.

I like having a cash flow cushion and knowing that I can sell any property at any time and walk away with cash.

But I would like to point out that is that very same influx of new investors that has cushioned the fall.

Income from fiancee can be added after that point, assuming bottom line of 20k/yr, in 1 year(-5k for loans) I will save ~24k and then use traditional financing for future investments not using more than 50% of $$ saved to ensure there is a cushion for my first property.2) Wait it out for 6 mos and build up some capital(200/mo*6=1200 saved, not much), then follow plan 1, bank around 24k after 1.5 years.3) Wait even longer , say 1 yr, and start out with ~12k saved, hopefully better credit and qualify for better loan terms.Those are my 3 choices right now, I want to start ASAP while the market is down and money is cheap, long term I would like to buy more multi's, maybe a few SFR's and do a few fix-and-flips in between to build up enough to supplement my W2 job with rental income and retire early.So the question is: Should I start now?

The appraisal actually came back a little higher ($175,000) so we have even more cushion than we had initially thought. 

Give them a first position mortgage or deed of trust with an equity cushion behind them and title insurance.  

HI Axelson,If you are going to invest or flip, you should try to not dump the entire $50K into the investment.Separate part of it into a cash backup as investor cash reserves.That way when (not if) you need cash to keep the investment afloat you will have it.I don't know how easy it is for you to get $50K, or what your income from other sources is, but having a personal cash cushion can be the difference between a successful investment and loss.Good Luck!