I'm searching over a large geographic area - do I need multiple real estate agents?

Question

Hi, I am looking over a large geographic area. I am specifically looking to purchase a multi family (2-3 unit) in the following counties

NJ (Bergen, Essex, Union, Hudson, Middlesex, Warren, Hunterdon, Morris, Sussex, Passaic, Somerset, Mercer, Atlantic, Burlington, Camden, Gloucester, Cumberland)

PA (Philadelphia, Bucks, Montgomery, Chester)

NY (Orange, Dutchess, Ulster, Sullivan)

Which (IMO) seems like a very large search area. When I talked to my lender to get preapproved for a loan, the first thing they ask me is the zip code I am searching in.

I called a large realtor office (weichert realtors) and the first thing they ask me is what zip code I am searching in. I try to explain I am looking for a property in an area equivalent to approximately 800 zip codes, but they don't seem to understand? I made the mistake of listing off a specific zip code on the phone and they immediately forwarded me to a single agent that had that zip code in the areas they cover.

Is this just not feasible? Am I making a mistake by having my search area be too broad?

Jules Aton · Answer

Yup too broad. Narrow it down to your first choice and then methodically spread out from there.

Richard F. · Answer

Huge mistake.

Each State has it's own licensing requirements for agents. Sure, some agents have licenses in adjoining, or non-adjoining states, but that is relatively rare.

Every market is different, do you really want someone that lives and works in Philly to act in YOUR best interest for a property in Gloucester? They will not know local idiosyncrasies, or, importantly, local specific RE laws. Or local contractors. Etc.

It's a little different if you are talking about an actual Commercial property or large apartment building or complex, but then you are usually working with agents that only work those type of properties, and they often have a broader network and scope of knowledge, although, your are really covering a lot of ground.

Especially looking for such a small property, which is just not significantly different from a single family home, there are certainly hundreds, and likely thousands that fit that description over such a large area.

Narrow your areas of interest, and perform your own initial searches to understand some basic numbers. This will enable you to narrow your focus further and seek demonstrably successful agents in those areas.

Robert Westenberger · Answer

@Andrew Postell thanks for your insight and thank you!

Andrew Postell · Answer

@Robert Westenberger Ohhhhhhh, that makes more sense then!  I was wondering if you were a wholesaler but if you are looking for your own primary home - this makes sense.

So, real estate agents usually have access to the MLS in their market, or the markets they operate in.  Meaning, a California realtor doesn't have access to the Virginia market (Usually) and really, most of the MLS access they have is for their town or geographical location.  So, a San Diego realtor doesn't even have access to a San Francisco MLS (again, usually).  They would have to pay for the access of those different MLS systems and if they aren't closing any transactions, then they aren't going to pay for the access (normally).

If you are considering these areas I would certainly interview your agents to see what counties/markets they operate in or have access to.  You might even find that you would need 2 or 3 agents in New Jersey alone.  Keep in mind, that if someone is an expert in Essex County it would be really hard for them to be an expert in Cumberland County because the distance is so great.  They may not even be able to show you a house in both areas - which is why you would need multiple agents!  At the top of the BP page is an "agents" button.  Click on that and it will match you up some some good realtors.

Now, some of the comments above still might apply.  You are correct that this is a pretty large area so I would encourage you to narrow it down some...but you might need to see properties to narrow it down.  Just start your search, interview the agents, and trust your instinct.  I would bet you can find a good home that will fit what you need.

Thanks for the post and thanks for the clarification.  Good luck!

Robert Westenberger · Answer

Thanks, everyone. To clarify my strategy, I am looking for a small multifamily property—preferably two or three units—in a reasonably safe Class B or C area within approximately two to two-and-a-half hours of North Jersey.

I work remotely, so I am not tied to a particular commuting area. My priorities are:

• Staying reasonably close to friends and family
• Buying in an area with stable or improving long-term demand
• Living in one unit and reducing my housing costs by renting the additional units, potentially with roommates in my unit as well
• Finding a property that performs reasonably well using conservative estimates for rent, vacancy, taxes, insurance, maintenance, and repairs

I have enough liquid funds to put at least 20% down on properties within my price range, although I still plan to owner-occupy the property.

I also want to clarify that I am not expecting one agent to search hundreds of ZIP codes or advise me about markets they do not know. I built a scraper that searches Zillow and collects rent-comparable data from Zillow, Redfin, and Craigslist across the geographic area I listed. It performs the initial screening and surfaces properties with potentially strong numbers.

My thought was that I could do the broad quantitative search myself and then contact an agent who specializes in small multifamily properties in the relevant local market once a property makes my shortlist. That agent could help determine whether the apparent opportunity is real or whether the numbers are being distorted by issues such as the neighborhood, property condition, illegal units, local landlord regulations, inaccurate rents, deferred maintenance, or some other factor that is not obvious from the listing.

For example, I have found properties advertising unusually high rental income relative to their purchase price. I recognize that a listing that looks exceptional on paper may have significant problems that my automated analysis cannot identify. ( literally just one example I scraped is is https://www.zillow.com/homedetails/708-Linden-Pl-Elmira-NY-1... . 179k pp and $4225/mo gross rent is 2.36% RTV. A realtor would have to tell me what is wrong with this property. Are the units legally recognized? IS that current rent? This one is below my price range though AND it's outside of even my huge search area)

My concern with narrowing the search to one or two markets at the beginning is that I may eliminate viable opportunities simply because they are outside an arbitrarily selected area. I was hoping that working outward from the data—and then using different local agents for serious candidates—would allow me to take advantage of my geographic flexibility.

Does that approach make sense, or are there practical problems with involving a local agent only after I have identified and screened a promising property?

Bruce Woodruff · Answer

You can start by doing a lot of the 'leg-work' yourself. Whenever I am looking for a new property, I jump on the internet first and start narrowing it down (and learning about the area at the same time) Once you have found a few 'possibles' , then it's time to call in a REA.

The sites that are available to us today are amazing and all have their pluses and minuses, so try them all out. For example, I like Zillow for some reasons, but switch to Realtor.com because I like their mapping better. Then Redfin has other better features depending on the type of property.

But I usually use these more than the good ole MLS, I rarely find myself using that.

Alan Asriants · Answer

Hey Robert,

While its good that you have your eyes set on some areas - your search is extremely broad - not even in the sense of having multiple realtors.

There are just too many boxes and variables and each of those areas differs drastically within the area itself. Im from phila and I will use that as an example. Even if your only criteria was Phila - I would urge you to look into details of neighborhoods and specifics. Philadephia as a whole is a huge search radius and data, housing trends, rental demands, etc are so different from one neighborhood to the other.

With such a wide search area - I'm confident you will hit analysis paralysis and never buy.

My suggestion to you is to pick the area you know absolutely best - maybe its 5 zip codes and draw your focus there. Likely its the area you already live in or have lived in before - thats the best place to start IMO

Plus having 5-10 different agents is so stressful. you have to repeat yourself so many times and if I was an agent that knew that you were working with multiple agents, I likely couldn't commit to taking you on as a client until you narrowed down your search further.

Hope this helps!

Alfath Ahmed · Answer

Good work on getting started @Robert Westenberger. Tons of OOS investors usually tend to buy real estate in the midwest because it is cheaper, land-lord friendly, and tech companies investing has boosted the economy.

You should do some research and find a good market that has good potential and connect with an investment realtor who can connect you with their team of contractors, lenders, and property managers.

They will also send you off-market and on-market deals that you can buy. Start with turnkey rentals then shift to the BRRRR model and you can recycle your capital and grow your portfolio. Eventually, do a 1031 exchange when you have enough units and exchange it for a large multi-family complex without paying capital gains.

Andrew Postell · Answer

@Robert Westenberger you have some comments already but what are you trying to do exactly?  That might help us understand some techniques if we knew what specific strategy you were doing.

Anthony Gayle · Answer

Short answer is: no, you don't need a bunch of agents. You're just not at the agent part yet based on what I gather so far.

Andrew asked the right thing. An agent's job is to help you buy in an area they already know well. Picking which area is not really their job, and most of them aren't set up to help with it. That's why every call ends with somebody asking you for a zip code. It's the only thing they know how to work with.

Here's an easier way in. Instead of trying to pick a favorite county out of 800 zip codes, figure out how you're paying for it first. That one decision shrinks the map on its own.

If you're planning to house hack and live in one of the units, you can use a low down payment loan (FHA), but you actually have to live there. So now your search is however far you're willing to live from your job. That alone cuts most of your list.

If you're buying it strictly as an investment, you're usually putting down 20 to 25 percent. However much cash you've got sets your price range, and your price range knocks out whole counties by itself.

There's also a loan where the bank looks at whether the rent covers the mortgage instead of looking at your paycheck (people call it DSCR). If you go that way, the rent has to be strong compared to the price, and you can check that yourself with rent numbers online and a mortgage calculator. No agent needed.

Same guy, three completely different maps.

And if this is your first one, I'd start close to home. Somewhere you can get to on a Tuesday night, where you already know which streets are good and which ones aren't without doing a week of homework. Going wide looks great on paper. It's a lot less fun when a pipe bursts two states away and you've never met the contractor.

So where do you live, and how are you thinking about paying for it? Answer those two and most of this sorts itself out.

Anthony G.

I'm searching over a large geographic area - do I need multiple real estate agents?

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