Question to all LA investors that go turnkey or BRRRR OOS!

[Adrian Kar]

I live here in LA and like the majority have looked at cash flowing properties OOS (As that seems where everyone heads) however I spent the night doing some quick figures on some multi and sfh in Bakersfield and and Fresno and found a few that hit the 1% rule. Am I missing something? Since it's in our backyard, are these markets so bad that you need to head to the mid-west!? Looking for something I'm missing? 

[Sanjeev Advani]

@Adrian Kar I think the biggest thing to understand here is that there is misconception about these areas in CA.  People are going OOS so they can earn 12-15% on their money, and some people are doing that and making a killing, and I think there is a time and place for that type of investing.  However, there are many areas that are shrinking as far as population, jobs, etc. that is what is providing these returns to many investors, but when they go to re-sell they will not be able to sell for the higher prices they thought they would be able to. 

Many people also think that Bakersfield is still some back country little town of 50,000 people where everything is still sold for less than $100K, and should earn at least 12 caps or higher.  

In my opinion, I would have to disagree with those ideas seeing as we now have a population of close to 400,000 people now, and if you look back at the last 30 years of population growth, Bakersfield has even outpaced Fresno's growth rate.  

Looking at CA as a whole, although we are having a tough time right now due to our legislation, etc. we are still a state that has a lot of jobs that are very high paying and areas in the state where people want to be, which is a good thing.  You will also notice that the jobs that are staying here, or coming here, are generally jobs that are 6 figures plus.  There are a lot of people that think this will become a state of high income earners (which in turn means higher property values and rents).  Shifting demographics. 

Looking at Central valley as a whole, you see that farmers are producing products that feed a majority of the country.  The profits those farmers are making are some of the highest profits, in some cases, that they have seen in previous years.  On top of that, we are the logistics hub of the state and with everything shifting to a shipping heavy society, that does bode well for the area, especially Bakersfield who can reach 90% of CA population in less than a 5 hour drive

Looking in particular at Bakersfield, you will see that the population has one of the higher growth rates, and if you come and visit us, you will notice that there are many different warehouses that are coming up all around us.  We have IKEA, Caterpillar, Ross, Target, Walmart, Amazon, L'Oreal, and much more (with much more coming).  This shift has taken place more  heavily specifically in the past 2-3 years.  This should be somewhat reminiscent of Phoenix before it became the name it is today.  Once we include the future High Speed Rail ( which some people think will 3x the population of Bakersfield) it looks like there could be a reason to come here versus having to go OOS.  

Not mention that you can always come and see your physical asset and take care of any issues that may happen much easier. 

Anyway, sorry for the long winded response.  I hope that this provides some value/insight into your future investing.  Feel free to PM me with any questions as well!