All Forum Posts by: Max Gradowitz

Awesome story @Charles Cline. Fellow Bakersfield agent and investor here. Being gay in a conservative town like Bakersfield is NOT easy, so bravo to you for having to deal with that. But as I'm sure you know, the real estate market has always been good here in Bakersfield. Flips are harder to find nowadays because in the last couple years so many wealthy investors from LA, SD, and SF areas have been scouting Bakersfield daily for flip deals. You can still find them, even on the MLS, but they don't pop up quite often and when they do you have to jump on them fast. I have tried wholesalers too but haven't had much luck with those, as I am very picky about my flip criteria. For myself, I've made the switch entirely to BRRRR and buy/hold investments. Flips are just too hard to do now. I don't necessarily suggest you change your plan up, but I'm just throwing it out there from my recent experiences dealing with both types of investments lately.

I wish you the best of luck.  If you ever need any tips, suggestions, advice, etc feel free to reach out!

@Chad Brey I have a mortgage broker here that is hooked in with all the traditional loan programs (conventional, FHA, etc) and also has connections for private money loans. The private loans are high down payment and high interest (like all hard money) but they'll lend on anything in any condition, so that's nice.

I use the property management division of the real estate brokerage I work for.  I don't get any referral fee or any financial benefit from recommending them, I simply recommend them because they do a good job (I use them myself) and they are less expensive than most other management companies I've looked at because they are small scale (they only manage like 50 properties I think).  Most charge a percentage of the rent, like 10% or 12% or something like that, whereas they only charge a flat fee of $50 per unit on multi-units.

I'll message you the name of the company.

@Michael Bell If you are looking for buy and hold rental properties, I focus on anywhere where the cap rate is high and the cash flows are high.  The more expensive parts of Bakersfield (the Southwest and Northwest sides of town) tend to have the lowest cap rates and cash flows.  The older more established neighborhoods where there are more multi-unit properties tend to have the highest cap rates and cash flows.  Specifically Oildale, La Cresta, and Old Kern.  When I run the numbers and compare multi-units, 90% of the time the highest cash flows are in the 93308 and 93305 zip codes.

From my experience working with investors that buy investments in Bakersfield, flips are getting harder to come by but the rental property market is still going strong.  When I find a good flip deal, even if it's an "off market" one, I'll inform my flipper investors about it and if they wait a day to respond, the property will be sold to someone else already.  Flips are quick easy money if you do everything correctly, so it's very enticing and therefore there is a LOT of competition from local and out-of-town investors.  With rental properties, there is a lot more involved with the math and proforma analysis and the supply of those properties is much higher than flips, so if you are looking for buy and hold rental properties, Bakersfield is a great market for that.  Just make sure you do your due diligence and be as conservative as possible with your expense calculations/estimations.  

Very hot market.  Low purchase prices yet fairly high market rents.  Like @Josh Justiniano said, it has gotten a bit harder to find good deals because so many big city investors have caught on and are always on the hunt for good rentals and flips, but with diligence you can find great deals.  Multi-units are best for buy and hold rentals because the cash flow is so much higher than SFRs.  But SFRs are much much better for flips here, because the market values are much higher than multi-units per sq ft.  At any given time, I'm on the constant search for multi-units and/or flips for anywhere from 5-10 investors at a time, most of which are BP members.  They key (as is with any hot investment market) when you find a great deal is to jump on it right away before another investor does.

Hey Jeet.   My mortgage guy has private money / hard money lenders that lend on pretty much anything except empty land, but they require a large down payment, like 50% down.  PM me if you are interested.  

One thing to note is that you should necessarily expect to "break even" on house hacking (in big cities anyway).  Your next question is likely "well, Max, wouldn't it be a poor investment if I don't cash flow while living there?".  Not really.

Say you go from renting your home for $1000 a month to doing your own house hack with a triplex.  You do the rental property calculator here on BiggerPockets, factor in the rents for two out of the three units (since you are going to live in the third unit), estimate expenses, and it comes out to a negative -$200 cash flow each month.  Why is it negative?  Well, because you are occupying one of the units, thereby reducing the rental profits by 33%.  Makes sense.  However, think of it this way: despite being barely in the negative each month, you are going from $1000 a month in rent to basically paying $200 a month in rent (paying for that monthly negative).  You are in a much better financial situation than you were before, you are $800 richer than you would be if you didn't house hack.  Further, and most importantly, you can move out in a year and rent out that last unit and make a good cash flow profit after that.

The key is to find a property that, after accounting for the decreased rental profit from you occupying one of the units, will not be so far negative that it wont cash flow well even after you move out and rent out the last unit.  Basically, house hacking is still a good deal if you are only $100 or $200 in the negative, but an AWFUL idea if you end up with like $1000 in the negative (unless that last unit is going to rent for over $2000 dollars or something like that!).

It isn't about "too much time" for me, so much as it's about seriousness.  I think most buyers agents are this way because we only get paid if a transaction closes.  So spending a lot of time working for someone is not a big deal if I know that they will eventually perform.  But if I think someone is going to waste my time by having me show them 50 empty homes with no AC running in the 100+ degree Bakersfield heat only to end up not making any offers, only then I will draw the line.

However, if I know a person is serious (they are prequalified already, they are eager to compare properties and submit offers, I believe they will actually perform and not waste my time, etc) then I'll sweat through my nice suit all day showing them houses!  Bring on the sweat!

To not waste an agent's time, that's simple.  1) be prequalified before looking at properties or making offers and 2) actually tell the agent you are serious about finding a property (and actually mean it).  That's it.

What a flip or BRRRR goldmine! 12,000+ sq ft two story commercial building in downtown Bakersfield. This is a prime area for downtown foot traffic! This commercial building needs rehabbing but will be priced far below market value. The after repair value (ARV) is between $500,000 and $600,000 depending on the amount of remodeling performed. The listing price will be $300,000 when it is listed on the MLS on Thursday.

This property is a storefront style building downtown. The downstairs is around 6,000+ sq ft and has concrete flooring throughout and has several separate portions to it - a storefront with glass display frontage, a bathroom, an small office, a bathroom, and a large back storage room with a large garage door that can be easily converted to parking space (has alley access to the garage door). There is a staircase going to the upstairs level. The upstairs portion is also around 6,000+ sq ft and has vinyl flooring that likely needs to be replaced, and also has several different rooms including a very large storage room, a small storage/filing room, a medium sized office, and a staircase leading up to an attic with roof access.

The property definitely needs rehabbing, as you can see in the pictures. That's why it is priced accordingly far below market price. The owner cannot spend the money to rehab it himself so he is very motivated to sell. I am not a contractor, so I cannot accurately estimate the repair costs on this job. But just based on my short interior inspection of the property, I'd estimate the repairs to span from $40,000 to $100,000 depending on what is performed. Both upstairs and downstairs need the walls patched up and repainted. Staircases need to be rehabbed as well. Interior doors are missing. Exterior looks to be in good shape, so I think only interior rehabbing required on this one. Obviously, the prudent thing do to would be to have a contractor estimate the repairs, as I can only give a non-expert opinion on what needs to be done to flip or BRRRR this property.

BiggerPockets members get first dibs at this property. It is scheduled to be listed on the local MLS on Thursday the 9th and it will likely not last long. As mentioned above, it will be listed at $300,000. If you are interested you can email me at [email protected] or simply message me on here.