Real Estate Investment Sector Returns
Bakersfield Is A Fast Growing City, Time To Invest!
Most people have an image of Bakersfield being the ‘armpit of California’, the middle of nowhere, or the place you drive through to get somewhere else, but lately Bakersfield has been picking up steam as far as popularity and it is bringing a lot of Investors to the area.
The city itself used to be less than 100,000 people, and today we are sitting at just lower than 400,000 people, which is quite a large city comparatively. On top of that, the past few years the city has been growing at approximately 1%/ year which outpaces the California population growth by almost double!
What Has Happened To The Single Family Market?
Around 10 years ago we had the previous economic recession which lasted for quite some time. Around 2011 we saw the bottom of that market and have been growing since. For example, single family home prices have grown by close to 82% since the recession which is quite a large increase. However, you will have investors that look at that number and balk because their property in a major market has increase close to 200%.
This is understandable, but you also have to look at the cash flow being generated by these properties and the cash flow being generated in the Bakersfield area. Also, you have to look at the initial price point to get into the market, versus other more major markets around the State. Real estate investors like cheap cash flowing properties because they can leverage their money more effectively in that scenario and get started earlier versus having to wait longer and not be able to purchase more deals which puts more strain on having to make the original deal they purchase work out well.
What Has Happened To The Multifamily Market?
At the same time that we had the previous recession, we saw a pretty low market in the multifamily sector in the last recession but since then we have also seen increases in that market over 85%, plus the cash flow returns which were earned in the mean time as well. If you take that number and break it down, you can see that the multifamily investment markets which are B and C class had the highest increase in value which numbered over 100% in that same time period.
That provides real estate investors with a good margin to increase their property appreciation while at the same time earning cash flow on their properties.
What Is Next For The Bakersfield Real Estate Market?
Bakersfield is on a growth path with new job sectors coming to the area and the expansion of old job sectors as well. The growth in population and the outpricing of a large segment of California’s population from their current areas of habitation will bring them more inland to areas like Bakersfield which will increase values for rents and sales prices over time.
We have done many deals, and continue to do many deals that return our clients a net return of 6%, 8% or even double digits on their real estate. If you are interested in real estate investing in Bakersfield, feel free to reach out to Synergy Real Estate and Property Management.
We provide our real estate investing clients a one-stop shop service where you can be sure that you are buying a quality investment property, and having that property managed in order to preserve your initial investment capital.
Until Next Time,
Sanjeev (Sunny) Advani
3400 Panama Lane Ste J
Bakersfield, CA 93313