West Covina, CA · Member since 2017 · 38 posts · 4 votes
Hello guys, I was just wondering if anyone had any investment in bakersfield ca or Fresno ca, I am interested in starting in these area on a fourplex. What will be your target range in these area ?
Bakersfield, CA · Member since 2016 · 378 posts · 307 votes
9y
Both are great places to invest in. Purchase prices are considerably lower than Los Angeles and other cities in SoCal but the rents are still high enough to produce high cap rates compared to the rest of the state. High cap rates and a healthy rental market = cash flow.
I can speak for Bakersfield. Multi-unit properties tend to have higher cap rates here than SFRs, but you have to put a little more into managing them. Multi-units here tend to cash flow best in B or C class neighborhoods like Oildale (North Bakersfield), Northeast Bakersfield, Downtown, and places immediately West of the 99 freeway. Prices for these range from $100k to $400k. Anything above that price range it seems to be hit or miss as far as cash flowing really well. When you go farther SW or NW it tends to get too expensive for good cash flow on multi-unit properties.
SFRs are managed easier but should be purchased in towns with a high rental density to avoid long vacancies (with only 1 home, when the tenant's leave it could be hell on the landlord if it becomes hard to fill that 1 vacancy). With SFRs, I'd stick to slightly higher quality neighborhoods like SW, NW, and NE. I'd also stay in the $150k to $350k range. Anything above that range will be outside the financial grasp of most tenants so it will be hard to fill vacancies.
Given that you are from West Covina, there is definitely more cash flow available in the Bakersfield market. We have recently seen an influx of investors from out of town, which shows me that the 3-4% cap rates, with negative cash flow, in the bigger markets of California aren't going to be very sustainable.
As far as looking for a 4-plex, the market in Bakersfield is currently very competitive (i.e. multiple offers, some cash offers, quick closing, etc.). With that being said, it is not impossible to get a good deal still on a property that will cash flow, if that is what your goal is.
We are also seeing some multi-family being sold for appreciation and debt pay down now. Meaning you will earn a minor cash flow, after expenses, but the properties are being bought because they are solid investment that are always rented in top class neighborhoods, so the investors are looking for places where they can have their mortgage paid down, and the potential of appreciation in the future, while holding an asset that will almost always be rented out.
It really depends on what you are looking for and the type of investment that would be best for you, given your current investment goals, tax needs, etc.
If you would like to chat more in-depth about your goals, and try to come up with a strategy that will work for you, feel free to PM me.