Flipping in Bakersfield, California

[Account Closed]

Hello BP colleagues, I have always envisioned my REI business as a buy and hold business, but my wife and I have recently realized that to reach our goals we will need to flip a few homes in the next few years. We view flipping as a way to accelerate capital growth to go after additional buy & holds.

Does anyone have experience in flipping homes in Bakersfield? If so, I'd like to hear your thoughts on how successful it is, and if you engage in flips anywhere else in Kern County. I am especially interested in the spreads from purchase price to to sale price. In addition, I'd like to know what percentage of ARV flippers typically purchase at here in Bakersfield. For example, do you purchase based on a price of 50% ARV, or 75% ARV? I would guess the lower, the better.

[Max Gradowitz]

In my experience, neighborhood quality is a bit more important with flips than it is with buy & hold rental properties.  @Josh Justiniano mentioned MLK/Cottonwood as not being a great area for flips, and I agree.  I've seen plenty of successful rentals there, but flipping is different.  The neighborhood has to be conducive to where someone would want to buy a home.  You don't want an area with a high "days on market", you want to sell that thing as quickly as possible as to minimize holding costs.

The best areas I've seen for flips has been in neighborhoods that are both desirable and located in older neighborhoods.  You want desirability because the days on market are lowest and it's easy to resell quickly.  You want older neighborhoods because a 1940s home is much more likely to have enough time to get beat up over the years and they also oftentimes have original flooring, counters, tubs/showers, etc that can be replaced to add value to the home, as opposed to a home built in 1990.  This is generally speaking here, and there are exceptions to every rule.  I've seen good flips in newer neighborhoods, but it's extremely rare.  That being said, the best neighborhoods I've seen for flips have been the Northeast (especially La Cresta / Alta Vista), the Oleander area, some parts of Oildale, and some older SW neighborhoods like Amberton/Sage Point/Stockdale.