New real estate investor in Bakersfield, CA

29 Replies

Hi, let me re-post my introduction (I first posted this in wrong place, and just found how to shoot Bakersfield RE forum).

I moved to Bakersfield in 2014 from Pomona, CA for my job (R&D in a seed company, W-2 employee). I used to be a healthy strong guy (some marathon and triathlon races under my belt) but turned 50 this June and got sick by pneumonia this July. The sickness made me stay in bed for a long time this summer and think "ok, let's read some book of REI taking this advantage, it could be a chance to start something very different and fun". I chose the books that I found online, "Investing in real estate with no and low money down" and "The book on rental property investing" by Brandon Turner. I've Now I'm reading "RIch dad poor dad" by Robert Kiyosaki.

I've been "an educated poor dad" of three kids, but my mindset has been 180 degree turned around after reading these books. I'm really happy that I found something that I could be enjoying rest of my life. My overall goals through REI are to

1) achieve financial freedom
2) support child education
3) travel to Japan to see my family and friends more frequently
4) ready for retirement

I'll be taking actions to commit to buy a SFH utilizing BRRRR by the end of 2017.

I need to look for deals efficiently and clearly structure how to finance the acquisition.

It would be great if anyone in this community could kindly share your experience in your first deal, how you found the first deal, how you financed the deal, what was difficulty and how you break through it etc. Also if any recommend about private/hard money lenders in Bakersfield that work with newbie like me. I should start sharing my plan with them.

Again these are my first greeting to BP community in Bakersfield.

Thanks in advance for your input!!

I can't wait to network with some in Bakersfield in the event on 10/19/17.

Eric

The Rich Dad Poor Dad book was not a blueprint to create wealth.  The guy bought some real estate in Hawaii when it was cheap, and then watched it rise super high.  That is not going to happen in Bakersfield.   Also, he did not give a blue print how to accumulate all of these assets.  Still, the book was a motivator for many.

Real estate is expensive.   Perhaps you should buy a property every couple of years and build a nice portfolio.   Bakersfield is solid.

Hi @Eiji Hayashi  

Welcome to Bakersfield (3 years ago...) and welcome to the BP community.  Hope you are back on the mend to being able to run marathons and triathalons again!

I just finished rich dad poor dad not too long ago as well.  Great book and highly recommended across this website!  Have you also seen the 90 day challenge recently put on by @Brandon Turner ?  This would provide a great blueprint to start looking for your next property.  

As far as looking for a SFR, there are many factors to take into consideration, in my opinion. It seems clear that you are looking for a property that is a value add property, and I like the BRRRR strategy, especially in Bakersfield. Although this brings up a few questions:

- Do you know what neighborhoods you are looking into?

- Price range you are looking into? 

- Are you looking for a higher cash flow return or for a higher appreciation return? 

- What range of return are you looking for on the cash flow side? 

There are definitely a few properties that would be good for you in Bakersfield right now. For example, I am looking at a property right now that has a potential purchase to ARV value increase of about $50K, and will return a little under 7% cash on cash after expenses.

Again, congrats on coming to BP and starting your journey!  That is often the hardest part of the journey.  If you need any help with lenders, contractors, property management, etc.  I can point you in the direction of some different resources.  

If you have any other questions please feel free to PM me.  

Best of luck, 

Sunny

Originally posted by @Eiji Hayashi :

Hi, let me re-post my introduction (I first posted this in wrong place, and just found how to shoot Bakersfield RE forum).

I moved to Bakersfield in 2014 from Pomona, CA for my job (R&D in a seed company, W-2 employee). I used to be a healthy strong guy (some marathon and triathlon races under my belt) but turned 50 this June and got sick by pneumonia this July. The sickness made me stay in bed for a long time this summer and think "ok, let's read some book of REI taking this advantage, it could be a chance to start something very different and fun". I chose the books that I found online, "Investing in real estate with no and low money down" and "The book on rental property investing" by Brandon Turner. I've Now I'm reading "RIch dad poor dad" by Robert Kiyosaki.

I've been "an educated poor dad" of three kids, but my mindset has been 180 degree turned around after reading these books. I'm really happy that I found something that I could be enjoying rest of my life. My overall goals through REI are to

1) achieve financial freedom
2) support child education
3) travel to Japan to see my family and friends more frequently
4) ready for retirement

I'll be taking actions to commit to buy a SFH utilizing BRRRR by the end of 2017.

I need to look for deals efficiently and clearly structure how to finance the acquisition.

It would be great if anyone in this community could kindly share your experience in your first deal, how you found the first deal, how you financed the deal, what was difficulty and how you break through it etc. Also if any recommend about private/hard money lenders in Bakersfield that work with newbie like me. I should start sharing my plan with them.

Again these are my first greeting to BP community in Bakersfield.

Thanks in advance for your input!!

I can't wait to network with some in Bakersfield in the event on 10/19/17.

Eric

 Hello and welcome! Best of luck to you!

Welcome!  I personally think Bakersfield is a good place to start investing.  Bakersfield has not had the rapid appreciation that much of CA has had and there is strong job growth (which looks like will continue into the future). 

If you want to meet other local investors in person, check out our meetup group: https://www.biggerpockets.com/forums/521/topics/49...

We have been averaging between 20 and 30 people at each meeting and there is a good range of experience levels.  

Hi Everyone.

I've lived in Bakersfield for about 14 years. I went to CSUB (Business) and landed a job with a large Oil and Gas company as a Systems Engineer and never left!

I did a couple deals in 2009-2012, anywhere from buying at the auction steps, flips and long term rentals of condos and SFR's. I sold most of it early this year and been waiting for this market to cool down before getting back in (can't find any good deals on better side of town). I'm interested in meeting like minded individuals with similar goals to help each other succeed and think I'll join on the next meeting.

Eiji, I also enjoy reading as a great way of learning (mentoring). I've read some good books that I can definitely recommend. Maybe we can trade book ideas at these meeting too!

Hope to meet you all soon.

Hector Gutierrez

@Eiji Hayashi

Welcome to the BP family! Great that you joined the site! Here are some recommendations for you:

Find and connect with other BP members that are in your area: http://www.biggerpockets.com/meet
Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts
Read Beginner’s Guide: http://www.biggerpockets.com/real-estate-investing
Check out BP Podcasts: http://www.biggerpockets.com/renewsblog/category/podcast/

If you wish to tag someone in the conversation on the forum, type @ followed by their name and then select the name of that person which should appear below the comments box. He or she will be notified of being tagged so that the conversation will continue.

Wishing you the best!

@Brian Ploszay , Yeah, the book was a motivator for me, the guy who had no education on finance and have been working on science side for many years. In Japan many value simplicity and frugality and love saving rather than investing (like my parents). 

I might need to save some before buying the first deal. Finding cash flow deal w/no and less money may be challenging. I will figure it out in the local RE meeting.

Thanks for your comment!!

@Eiji Hayashi

Love simplicity and frugality.  These are good values from your parents.   I view owning rental units as savings as well.   Remember, it is not passive investing.   Real estate takes work.

@Sanjeev Advani Thanks for your comments. Those must be the questions that I should ask experienced people in the Bakersfield meeting. Here are my thoughts that I came up with,

1) I was looking at east side of 99. I figured that properties on west side is too expensive to pursue cash flow. Is there neighborhood that you avoid? I didn't like the neighborhood along Nile when I first drove through there. I have impression that good fixer-upper may pop up sometimes in college heights.

2) I filtered out the properties more than 150K before analysis.

3) I just learned from webinars and podcasts that $200 cash-flow and 12% cash-on-cash return are working for Brandon in his local community in WA. It may be depend on the market. 7% is the rule of thumb in Bakersfield? That's what I need to ask you guys what works/what doesn't work. 

@Eiji Hayashi I agree that east side of the 99 will be the best place to find cash flow.  Right now almost all deals that I have done this year are east of the 99.  Areas to avoid would be near Cottonwood, near Baker, and Flower.  Although there are some good areas near this that have good cash flow.  

You can still get good properties for more than $150K but then they will be more along the lines of flips instead, in my opinion.  

The $200/month cash flow is a good model, and I think you can be successful with that but the 12% cash on cash return is a return that is not really achievable in CA anymore.  The average cash flow in the Bakersfield area is more along the lines of 6% although it can fluctuate up and down from there.  For example, I am working on a property that will have a cash on cash return of 8.3% right now.  

@Brian Ploszay Thank you. I like simplicity and frugality too. Good "asset" from my parent and a part of my mentality. It helped me to overcome financial crisis that I had when 40's. I'm learning that RE isn't passive investing. I would be enjoying the process.

@Gene Hacker Thanks, I'm planning to join the meeting on October 19th. 

I saw some fixer-upper deal in Lake Isabella on Realtor.com. What is your thought about investing for cash flow in there? I'm just curious.

@Tom Ott Thanks, I will shoot you when I come up with turnkey questions.

@Hector Gutierrez Thanks, I'll see you in the meeting on 19th. What is your recommend of REI book? I have "The book on estimating rehab cost" and "flipping houses" to be read next.

Originally posted by @Eiji Hayashi :

@Gene Hacker Thanks, I'm planning to join the meeting on October 19th. 

I saw some fixer-upper deal in Lake Isabella on Realtor.com. What is your thought about investing for cash flow in there? I'm just curious.

I have rentals in the Lake Isabella area.  The tenant pool is generally pretty difficult but things are slowly getting better.  There was a surplus of rentals from "accidental landlords" from the last downturn.  That is finally starting to change but there are few jobs so it can be hard to find tenants with decent credit (or any credit at all really).  The dam project contract was just awarded so that could be a big change, at least for several years. The take way is that investing in rentals in the Lake Isabella areas may be less passive than other areas.  

That's awesome that you have clear goals. Here's to working hard to achieve them!

Hi @Gene Hacker , @Sanjeev Advani mentioned where he would avoid to buy properties. 

I came Bakersfield four years ago living NW and commuting towards north of town to work,  Yeah, I really spent most of my time in only NW so far, except College Heights area where I once looked for my primary house. 

I think it's unwise for me to even try to invest in areas that I've never drive through.

Every time when I see metal net fence around house in pictures on realtor.com, I find myself backing up from even running analysis tools seriously.

Would you investors recommend me to drive through east side in order to get familiarize myself with east side? 

Is there any sign that make you think "oh let's avoid investing into this neighborhood" from your experience? 

@Eiji Hayashi , I will buy deals for rentals in lower end areas but lower end areas are pretty safe in the Lake Isabella area compared to similarly priced areas in Bakersfield. 

One example...I bought a cheap rental a few years ago that had been vacant for 8 years, and there was literally no vandalism at all.  All the windows were intact and all the appliances were there.  The water heater in an unlocked exterior closet was still there.   Areas a similarly priced area in Bakersfield, the have water heater would have been stolen in days.  

I perform home inspections in Bakersfield and in the lower end areas it is common that water heaters and appliances are not installed at the time of the inspection because they want to wait until the day before closing to put them in. 

I have also been in homes where the appliances had been stolen the night before the inspection. 

Personally, if I find the right deal, I will invest in lower end areas as long as I feel safe and I think there is little risk of theft or vandalism during vacancies.   It just takes getting know different areas and your risk tolerance. 

@Eiji Hayashi I think it would definitely be beneficial to drive around town a little bit and familiarize yourself with the areas.  I would be happy to do a drive along with you and educate to different parts of town.  

I think there are definitely pockets to stay away from but you can't just give a blanket statement that a given area is bad.  For example, I wouldn't tell you stay out of Oildale because there are parts of Oildale that return very well for clients I have worked with.  It really comes down to the type of portfolio you are trying to build and if you can achieve the returns you are looking for inside of the asset class you are looking for.  

As far are signs on a property that I would avoid, I would say that bars on windows is generally a very good thing to avoid.  

Thanks for sharing your story. I understand now it depends on one's level of risk tolerance whether go ahead or stay away to invest in low end area. I will definitely drive through different neighbors in order to get know them.  

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