All Forum Posts by: Max Gradowitz

I'm an agent in Bakersfield.  For some reason, nobody seems to think demolition and rebuild is a good idea here.  Most of my clients are investors like you.  When they get the itch to demo a building (and downtown has a LOT of dilapidated buildings as we both know) they always look into the costs of new construction permits, costs of engineering/designing the structure(s) and getting them approved by the city, and the costs of hiring private construction contractors to build a brand new structure...  Forget demolition costs - that's pennies compared to everything else!  After they add everything up, it ends up being a poor investment decision.  I've had plenty of investors dip their feet into these waters and none of them end up pulling the trigger on actually doing it after doing the math.  Not trying to discourage you from building the investment property of your dreams, just giving you my experience with this kind of thing.

My guy Kenny Armstrong with Armstrong Roofing does all my roof stuff.  Not sure about GCs, I've used a few and never ended up with one in particular I liked.  But Kenny Armstrong for roofing every time for me.  I'll PM you his email address.

Hi Mark, nice to meet a fellow Bakersfieldian.  I'll PM you my info.  I'm an agent here in Bakersfield that represents investors in acquiring buy and hold properties.  Multi-family is the way to go.  The profit on multi-families (duplexes, triplexes, and fourplexes) far exceeds what you typically get from any single family residence.  Multi-family properties are the best for buy and hold in Bakersfield because the price per square foot is lower then a comparable single family home (so they are cheaper to purchase) but you end up getting a lot more rental income because instead of collecting $1000/month on an average sized house, you collect three monthly rents of $700/month for an average sized unit in a triplex.  So, in short, a nice triplex can be purchased for the same price as a single family home, but yield double the rent profit.  When you crunch the numbers, multi-family properties win every time for long term buy and hold in Bakersfield.

I tell my clients "If you want a profitable flip, buy a home.  If you want a profitable long term buy and hold rental, buy a multi-family property."

Bakersfield is a really big and active market for flips and buy/hold rentals.  Where's our forum?  I would imagine that the hot investment market that the southern central valley has would warrant it's own forum of some sort!

I'll second what @John Duguid said about the Central Valley being the highest cap rates in the state.  Bakersfield and Fresno have particularly high cap rates because they are semi-big cities with growing economies/populations with high rents, yet purchasing real estate in these areas is still very affordable compared to every other medium-large city in California.  That's the ideal recipe for a high cap rate and a profitable rental investment overall.

Bakersfield Realtor here. My question for you is how do you plan on acquiring the property?  If you convince the owner to sell it to you before the foreclosure, then you might be able to get it for the price of "satisfying the loan amount", but if you plan on waiting until it goes to foreclosure, the bank/lender is not looking for the loan amount.  They want to get market value for the home, whether that's lower or higher than the loan balance.  The bank is going to hire an agent to work in their best interests in getting the highest market value possible for that house.

To make it a profitable flip, you really have to be confident in the ARV and the repair costs. That's the key. Many clients that I've dealt with in the past end up losing money on deals because of miscalculating either the ARV or the repair costs. Be sure to use the most conservative ARV possible - a good Realtor can help you with this. That will determine what you want to offer the owner (or the bank if it goes to foreclosure) and if you can't get it for a price that you KNOW you make profit on, then you gotta walk away. Shoot for at least $15K in profit, so you can account for various escrow fees and holding costs, which will only be a couple thousand here and there.

Hi Jason,

A lot of this looks good, but I'd just note a few things.  Non-owner occupied loans usually carry 1 or 2 % higher interest rate than owner-occupied.  I don't think legally we can "quote" rates over the phone or internet, but the last non-owner-occupied loan I saw was in the 5% range.  You can talk to a mortgage broker, bank, credit union, or any lender about this for more details.  Message me if you want a referral to a good mortgage broker, I know a great one in Bakersfield.  Anyway, you can always get an owner-occupied loan for a multi-unit, but you are promising to live there yourself (for at least 1 year I think).  If you don't want to do that, then you gotta get a non-owner-occupied loan, which is has a slightly higher interest rate.

Also, as a general tip, I'd say the best ROI I see in multi-units in Bakersfield tend to be properties in the 93305, 93301, and 93308 zip codes. These tend to be older neighborhoods that have a lot of multi-unit properties, and therefore make for a hotter rental market, due to older zoning. My favorite area for these is the 93305 zip code for sure. I'd also echo what others have said about 2 or 3 bedroom units having longer-term tenancies and less vacancies overall, compared to studios or 1 bedroom units. I'd also recommend getting in touch with a local real estate agent that can set you up with MLS access so you can see whats out there - Loopnet is good but it's designed more for for large scale commercial, not so much for small scale residential income properties like duplexes, triplexes, fourplexes, etc.

I've always used the property management division of the brokerage I work at for my clients rental properties and my own, so I probably have a bias towards them and I haven't used a wide range of management companies so I can't compare.  But I never suggest managing it yourself.  I'm too busy during the week to deal with tenant issues, emergency repairs, etc.  The management service I use just charges a small fee to each rent payment received from the tenants, and they deal with all of the tenant's problems.  If repairs are required, the management service makes sure they are done and they send you a bill for the costs.  It's a lot less stressful to use a management company, especially if you don't live nearby your rentals.

As for that rental value: the rental values in that area justify $1200 a month in rent in my opinion.  I have a rental property around that same area that I just got new tenants for, and I'd say $1200 is fair for what you have.

Hi, I'm a long time fan of BiggerPockets and recent forum member.  I am a real estate agent with over 10 years of experience in consulting investors and finding them profitable real estate investments.  I find lucrative on-market and off-market deals in Central California (mostly the Bakersfield and greater Kern County areas), crunch the numbers so you know the after-repair values and what you should offer, and assist you with your real estate purchases and sales.  My typical investor client purchases real estate, rehabs, and flips within 6 months for quick profits.  But, I also oftentimes work with investors looking for long-term rentals.  A lot of my investor clients reside in expensive metropolitan cities in California (Los Angeles, San Diego, and San Francisco areas) and invest in flips/rentals here in Bakersfield due to the affordability of real estate here and the relatively high profit returns.  I look forward to meeting some BiggerPockets members from California, specifically investors.  Cheers!