What’s the best toe to dip into the real estate investing market?

Question

My partner and I are just getting educated and organized around starting our real estate investing adventure. So far we are leaning toward fix/flip, but I'm also curious about rentals and even wholesaling.

What's the lowest risk compared to profit method of real estate investing for beginners?

Ashley Meilunas · Answer

Thank you all for the responses! I should have clarified a couple of things. My partner is a friend of mine, not a domestic partner. I have a spouse in addition to my partner in real estate investing. And she also has a spouse. And between us, we have a bunch of kids. So living together might not be feasible lol. Also, both of us have established homes and are not looking to move out to live in a home while we renovate and/or rent it.

Drew Sygit · Answer

Wholesaling is the lowest risk financially.

Rentals are probably next.

Fix & Flips are often the riskiest due to learning curve on pricing, dealing with contractors, unexpected surprises once work starts, etc.

Jaron Walling · Answer

@Ashley Meilunas The best way to get into into REI (not the easiest) is by buying a distressed property (aim for cosmetic+ rehab) and renovate it while living there. You can achieve this and put very little down if you buy in fridge areas, do the research, and negotiate a good price. You can add some value and fix it up. You could also rent by the room or house-hack at the same time which is very popular right now do to high housing costs.

Live-in flip, house-hacking, or a combination is basically a REI degree. It requires sacrifice, sweat equity, contractor relations, and property management (like screening tenants). You could live with family, find a roommate, or market the unit of a duplex. It all requires effort. You will gain knowledge from different aspects of the business which is invaluable. When you move out or sell the property is already fixed up. It's a long term win win.

I lived with my brother for 2 years, hired contractors as I could afford it, refinanced, and eventually moved out keeping it as an LTR. If an average guy from the mid west making $60k per year can do it you can too. Cheers.

Ashish Acharya · Answer

@Ashley Meilunas For beginners, the lowest-risk, best return strategy is usually house hacking, buying a 2–4 unit property (or a single-family with rentable space), living in one part, and renting out the rest using low-down financing like FHA. This builds equity, generates income, and gives you hands-on experience with rentals. Long-term rentals are also low-risk and ideal for building passive income and wealth over time, especially with property management. Wholesaling has low upfront costs but requires strong marketing, negotiation, and legal understanding, moderate risk with high hustle. Fix and flip offers high profit potential but carries the most risk due to renovation costs, delays, and market shifts, making it less ideal as a first deal. No matter the strategy, setting up the right legal structure (like an LLC) is key for asset protection and tax optimization, and having a real estate CPA on your team will help you maximize deductions and stay compliant. Starting with rentals or house hacking gives you a solid, low-risk foundation to grow from.This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Ashley Meilunas · Answer

@Jaron Walling it's a good perspective! I appreciate it and and agree. We have an established LLC and an operating agreement that governs our partnership. Is there anything further you think we need? Or any blind spots we still have?

Jaron Walling · Answer

@Ashley Meilunas Unless your married or have a written business agreement I would not buy real estate with any of those people. It's pretty risky.

And by agreement I mean a legally binding document that outlines the terms and conditions of the business relationship or transaction between two or more parties. I should establish responsibilities and expectations for each party.

It's no different than a lease stating the responsibilities between a tenant and landlord. It's important and evolves overtime.

That's just my 2 cents.

Wale Lawal · Answer

@Ashley Meilunas

Great question! For beginners, house hacking or buy-and-hold rentals typically offer the best balance of low risk and steady profit—especially if you live in one unit and rent the others. Fix-and-flips can be profitable but come with higher risk due to renovation surprises and market timing. Wholesaling requires less capital but demands hustle, marketing, and strong negotiation skills. Start with a strategy that fits your budget, time, and risk tolerance—rentals are often the best first step for building long-term wealth.

Good luck!

Anthony Boyd · Answer

Also curious, commenting for notifications

Mackaylee Beach · Answer

I would start by identifying your overall real estate objectives, both short-term and long-term. Focus on outlining your needs and desires regarding properties and the markets you have in mind.

Wholesaling might be the least financially risky way to start in real estate. It involves finding properties priced below market value and assigning the purchase contract to another investor for a fee. This strategy requires minimal capital investment and offers the opportunity to gain valuable experience in negotiating deals and understanding market dynamics. By focusing on building a strong network and honing your skills in identifying potential deals, you can create a profitable niche for yourself in the real estate market.

Jaron Walling · Answer

@Ashley Meilunas You mentioned a partner.

My brother also made sacrifices because we lived in a construction zone for 5 months. Make sacrifices at a young age if you can because it's so much easier.

What’s the best toe to dip into the real estate investing market?

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