All Forum Posts by: Matt Owen

Hello All,

I've been doing lots of deal analysis off of the MLS recently in Bakersfield. I am looking to get some feedback on this property. I'm still getting accustomed to the area so my current strategy is to go though all the listings and determine what is a good deal. I'm setting any property that performs higher than a 7% cap rate given my assumptions aside so I can further research the neighborhood. That seems to be a reasonable rate of return on a property around here. I would welcome peoples opinions about that.

Everything I have found so far seems to be in B-C class areas although with no experience how do I tell the difference? I don't want to buy a property in an area that I'm scared to go to. How do I really know just by driving by? research the crime statistics in the area? I know there will be some but what is a red flag that there is too much?

I use the same assumptions for each property. this property came out with an expense ratio of 40.6%. Most properties I put in this sheet come out between 42-47%. Look forward to everyone's feedback on my spreadsheet and assumptions. Since this property mentioned they had some deferred maintenance in the listing I added $10,000 for improvements. 

Please feel free to steal the spreadsheet if you like it! I modeled it after a picture I saw of Brandon's on this site anyway.

https://docs.google.com/spreadsheets/d/14C0oawhJyD...

Thanks,

Matt

Hello everyone!

I wanted to introduce myself, my name is Matt Owen and I'm looking to invest in Bakersfield CA. I've been here for about 3 years and I work in oil and gas. I have been looking on the forums and listening to podcasts on the commute to work for about a month now. I'm actively looking for properties and am most interested in buy and hold strategy. Maybe a flip and hold if I can find the right deal.

I'm struggling to find deals that provide a cap rate over ~7% here in Bakersfield. The few I have found are multifamilys either downtown or on the east side. I am relatively new to the area and I have trouble knowing what areas are good and bad. I need to do more driving around I guess but if there are some Bakersfield locals on here I could use some help with that. I feel like the areas will be Class B-C tenants. Everything on the west side (class A) seems to have a ~0.6% rent to price ratio and a fairly negative cash flow. Although I am looking to buy a primary residence on this side of town to rent out some rooms and househack to lower my current rent payment.

I also have some trouble estimating expenses. I built out a spreadsheet that accounts for maintenance and property management and taxes but I don't know how accurate it is. For most of the analysis I've done my expense/rent ratio ends up around ~45%. I'll make another post in the deal analysis forum for some more In depth analysis of the actual property and some feedback on how I can firm up the numbers.

I feel like the other area lacking is how to firm up the Comps for rent in an apartment in that part of town. I went on Zillow and Trulia and the ranges seemed fairly large. So if $50 a unit can make a big difference in the cash flow on a 5-7 unit, how do I ensure I have it right or that I get into a place that I could hopefully force appreciation by bringing the rents up? Just experience looking at places?

Lastly I am feeling challenged is with finding deals. I have been using the MLS so far or RedFin since I'm meeting with a few realtors this week. However everything seems a little tight on the numbers. I want to start looking for off market deals and I'm just starting to research that but if someone has some links to good forum posts on the subject or some tips to get started I would appreciate it.

Again, look for another post from me in the deals forum because I could use everyone's help as I continue to learn!

Thanks for the assistance and I look forward to getting to know you all,

Matt

I wanted to chime in here. I'm new to BP and to real estate investing and have been asking some similar questions. I live in Bakersfield and I recently went to a local Meetup, the leader of the meetup had similar comments to some above. The local market was softening due to oil prices and he expected to see a decline start to take place by the end of this year. He recommended buy and hold over wholesaling and flipping due to tightening margins. 

It's hard to know what to do because I hate to buy high and then have the market drop but stocks are headed down as well so is it best to hold everything in cash and wait for a time to buy? I feel like speculating like that could put me off investing for 1-2years and I'd hate to prevent myself from jumping in and learning during that time. 

It's possible to go out of state but being a total newbie I feel like there are a lot of potential pitfalls to that since my inexperience could get me into a situation I don't want to be in.  My other thought was to try and house hack on a triplex or fourplex and even if the market does go down I'll still have a free place to live and that adds about $750 a month to my bottom line by eliminating my current rent. Minus whatever expenses I incur from the property. Also I get a crash course in land lording which I think would be valuable. 

Best I can find in Bakersfield right now are rent to price ratios of around 1% and a cap rate of 6-7%. Maybe it's acceptable to take a slightly lower return on the first one as a learning experience? Although if I get my numbers wrong that means that I have less vision against mistakes as well.  

Thanks for all the help and this is a great thread so far. Very helpful

Matt

Hey Tom, I'm in a similar boat. Brand new to the whole thing but I'm listening to podcasts and reading books and trying to figure out if this is the direction for me. 

Thanks for the link to the meetup Gene. I'll have to check it out