What would you do

20 Replies

If you had 200k, your strategy is buy and hold
Want to get something close to Los Angeles as possible, not more then 3 hrs drive from
LA. No hoa properties
What would u do. Sorry no 3m here

Bakersfield has your name all over it! I heard it through the Grapevine:)

100 miles due north, and easy drive.

wikipedia

Grapevine is an unincorporated community in Kern County, California, at the southern end of the San Joaquin Valley.[1] The village consists mainly of roadside services.

thanks,

Matt

@Matt Rosas.  Do you own anything in Bakersfield? I had a conversation with a friend who lives there about this very subject. I think the North west end of Bakersfield is what she recommended. I'll check again for zip codes. 

Before we get ahead of ourselves....

@Asif M. - No HOA rules out Condos and most townhomes.

1) I assume SFR is something you'd consider, would you also consider commercial?

2) how much time do you want to allocate towards active management of the property?

3) are you handy? or do you have trusted resources handymen, contractors you can rely on?

4) what is an acceptable return on your money on an annual basis?

5) do you intend to leverage your $200k? if so, how far

6) would you consider a passive role in the real estate investment?  (eg. you put up part of the money, someone else deals with managing the real estate you get a preferred return)

7) would you feel comfortable if your equity was part of a group of investors who pooled their equity together to buy a larger real estate investment, again taking a passive role in the ownership group, 

Look forward to your answers.

Best,

A

@Francis A. ,

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Raymond

@Matt Rosas. I had to repeat this….

 Do you own anything in Bakersfield? I had a conversation with a friend who lives there about this very subject. I think the North west end of Bakersfield is what she recommended. I'll check again for zip codes. 

@Raymond 

@Raymond B.  Thanks for the tip!!

Hi Francis, no Bake yet:) Maybe 2015. I used to make that drive for work a couple times month back in the 1900s.

Thanks,

Matt

Lancaster/Palmdale is even closer.  Don't need the grapevine for that area!  (Very clever comment @Matt R.  )

Originally posted by @Derek Walkington:

Lancaster/Palmdale is even closer.  Don't need the grapevine for that area!  (Very clever comment @Matt Rosas )

 Sure that's a good option. I would prefer Bake to AV for many reasons. Stronger stand alone economy, oil, gas, AG and Cal State University where as AV is more of an LA commuter based economy,  higher unemployment,  per capita less desirable tenant anecdotally speaking. I can't so much disagree with Jays recommendation other than you can get 10% appreciation alone on Bake. More work yes, more Murphys Law yes, more money, likely yes.

Unemployment Bake 7.9

Unemployment Lancsster 10.9

That's a huge difference for landlords and investors.

thanks, 

Matt

Unemployment really won't affect your vacancy rates running rentals that rent for less than $1,000 per month.  At least that's my experience in Fresno.  When unemployment is high people migrate to lower cost rentals and rent more period.  Unemployment doesn't help homes sales.

I'm familar with Bakersfield.  If your looking for lower end rentals stick around oildale.

Frank

Frank Romine, Real Estate Agent in CA (#01957844)
Originally posted by @Allan Glass:

Before we get ahead of ourselves....

@Asif M. - No HOA rules out Condos and most townhomes.

1) I assume SFR is something you'd consider, would you also consider commercial?

i would consider SFR but i would prefer Multi unit as maintenance might be easier, commercial not at this moment as i have no idea yet on the financing aspects.

2) how much time do you want to allocate towards active management of the property?

I would rely on PM for that or a live in manager. 

3) are you handy? or do you have trusted resources handymen, contractors you can rely on?

I have Handy man in Los angeles but not in bakers field 

4) what is an acceptable return on your money on an annual basis?

My main is goal is long term gain on the value of property as far as annual basis not sure

5) do you intend to leverage your $200k? if so, how far

Yes and therefore will not want to put all in one property

6) no passive roles, i want control as possible.  so not interested in pooling money at this moment unless opportunity is really clean and looks good.

 Above for @ALLAN GLASS

@Francis A.  

@Matt R.  

thank you for the bakersfield Idea, These are the areas i was looking at

1. Riverside county (Corona, Palm Desert)

2. Palm Dale/ lancaster

How do you guys figure out which area would be better, besides the unemployment rate.

Now i am definately thinking about bakersfield as it has its own local economy structure. 

I think for Multi you are looking for the best possible deal/area in any direction within the 100 mile radius plan. Bake/AV to Temecula/Palm Springs

Thanks,

Matt

I have rentals in rural Kern county (Kern River Valley) about 45 minutes from Bakersfield, but I do work in Bakersfield regularly.  Prices are up around 30% or so from the bottom but I still see deals where investors are buying and will likely squeak out a little cash-flow.   There are some pretty rough areas in Bakersfield but there are tons of areas with homes built in the last run up that still produce a decent amount of foreclosures or short sales...but the overall number of these deals are much lower than the past few years.  The economy is pretty stable with farming, oil, The University, and distribution centers.  

Its small enough that I  would recommend spending a weekend driving around and looking at different areas.  After that I think one would have a reasonable idea of the areas they would prefer and the areas they would avoid.  

Yes good point Gene. I forgot about the massive distribution centers at the Grapevine. Turns out this location is a days drive to about 50 million. LA, SF, DIEGO, VEGAS, PHX etc. Back in the day there was US Army Fort (Tejon) at the pass as this was a closely guarded transport area for Cali and there were banditos raiding the shipping. The army even brought in Camels to help with shipping over the pass.

thanks, 

Matt

@Gene Hacker  

Thank u for the advice I'm going to look into Bakersfield.   Any suggestions on where to find the properties in this area.  

Also what would u recommend btwn  Palm Springs or Bakersfield 

Matt,  I have read that some companies have chosen to locate the distribution centers in Bakersfield because they need to move so far to break the old union contract.  And Bakersfield is a the closest place to LA that is still far enough to break away.  I am not sure this is true but something I have come across a few times.

Asif, my suggestion on finding good properties is to get online with zillow, truia, or realtors.com and find a dozen or so properties that could be a good fit.  Then spend a day visiting the neighborhoods and getting a feel for the area.  I think most people can get a feel of a city the size of Bakersfield after spending a few days exploring.  The other option would be to reach out to a few Realtors and if one seems like a good fit, work with them to find  a deal.  

I don't really know the Palms Springs market so I cannot add any insight there.  

Hi @Asif M.  

Well, the board clearly loves Bakersfield... my concern would be with your prospects for long term appreciation, which is often harder to achieve in the tertiary/outlying markets.

Based on your answers above, you've also ruled out most commercial (if you don't want all your eggs in one basket) and partnerships / JV's. This leaves you squarely in the SFR and small multifamily arena, unless you take @Jay Hinrichs  advice and place you capital in private loans.  If you did your yields would be better, but of course you would have no shared appreciation.

Since you've put the 3hr limit on distance from LA, a preference for appreciation (I assume over yearly cash flow) and noted you're handy I'd suggest looking into a emerging B or C market in LA.  I'd find a fixer that no longer fits the needs of the market and resolve the problem.

An example would be finding a small 1 bedroom SFR or a duplex that has singles or 1 bedroom units and add square footage and/or beds and baths to make it more "rentable". Again, you're interest in a long play leads me to believe you'll both, find better chance for appreciation and have more time to be hands on with your property due to it's proximity to your home.

Best of luck.  Keep us posted on what you decide.

A

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