25yr old in NYC -- finding a market to start my search

[Jake Ferman]

I am 25, living in NYC with ~150k in savings. I have a high-paying, but unsatisfying job.

I'm planning on quitting soon, moving back home for a little and taking a few months in between my next job to pursue my first investment.

My rough idea for an investing strategy is:  long-term, not necessarily looking for high cashflow (just want to start building equity), quality deals > amt. of doors, Class A/B neighborhoods mainly for low vacancy. 

I'm already stuck in phase one of deciding what market to focus on and get overwhelmed when even deciding where to start my search.

I guess my questions to you all are:

 1. Should I focus on a market in-state or look elsewhere? -- Right now I'm interested in class A/B suburban markets outside of NYC.

 2. Going off that, if I were to choose a suburban market, doing CMAs and underwriting deals seems like it'd be a challenge as there's less transaction volume. So would it make sense to focus on bigger markets to start?

 3. Would you suggest working with an agent to start, or focus on other marketing channels (driving for dollars, mailers, pre-forclosures, etc.)? -- focusing on too many channels would get overwhelming quickly, but I feel like I'd succeed if I focused on one.

As this post probably lets on, I'm a bit of an over-thinker which tends to lead to paralysis-by-analysis.  I'd also love the chance to connect with any of you 1-on-1 either in person or virtually. 

I've been a spectator in this community on and off for a while now. I'm excited to finally introduce myself and will have lots more questions to come.

Thanks in advance for any advice!!

[Abel Curiel]

Hello @Jake Ferman and welcome to the forums!

I agree with @Nathan Gesner & @Caleb Brown, let your job help fund your first deal while perhaps searching for a more fulfilling position elsewhere.

1. Should I focus on a market in-state or look elsewhere? -- Right now I'm interested in class A/B suburban markets outside of NYC.

NY can potentially be a good fit for your goal of building equity.

According to Zillow, San Diego is the only major metro area with property value growth higher than NY since last year.

Suburban markets outside of NYC like Long Island and Westchester continue to see price growth and high demand.

That said, NYC's median sale price is about double the national average so speaking with a lender is recommended at this early stage. When speaking with a lender, let them know what you have planned for the next 3-5 years with respect to RE investing. This way, they can do more than just qualify you for deal #1.

2. Going off that, if I were to choose a suburban market, doing CMAs and underwriting deals seems like it'd be a challenge as there's less transaction volume. So would it make sense to focus on bigger markets to start?

CMAs in low volume markets can be challenging especially since Zillow and Realtor.com do not hold all sold data. In areas with a lot of market activity, there will be more comps to choose from but please remember that CMAs also include active listing, under contract and expired data (not just sold data).

Connecting with an agent who specializes in your area(s) of interest could be helpful here.

We use 3 platforms, including our local MLS, to run CMAs. Most investor-friendly agents in any market you choose will have a similar process for accessing all relevant data even in low-activity markets.

3. Would you suggest working with an agent to start, or focus on other marketing channels (driving for dollars, mailers, pre-forclosures, etc.)? -- focusing on too many channels would get overwhelming quickly, but I feel like I'd succeed if I focused on one.

I'd definitely recommend working with an investor-friendly agent. It will help you get educated on the acquisition process, save you time and save you money.

but... Why not both?

While the marketing side would essentially give you another full-time job, it could yield results and bring more options forward.

Your agent can help you source most prospective deals while utilize your own marketing efforts to find potential deals. 

Keep in mind, the best deals usually take several months and sometimes years to convert. If you're sending mailers, this could mean a 5-figure investment just to snag a couple of qualified leads.

An active wholesaler and houseflipper in my market says that newer investors should expect to spend nearly $5,000 on 1,000 mailers for 6 months just to generate 1 quality lead (citing a .1% conversion rate). This is also assuming that you'd have other systems in place to help capture, pre-qualify, and convert the lead (i.e. website, call center, etc.).

Hope this helps!

Abel