No matter how bad it looks, remember this: Bakersfield locals are used to it. And, because Bakersfield locals are used to it, Bakersfield is a safe place for you to invest.
Disclaimer: The information that follows includes references to external sources, however, I am not intimately familiar with the statistics regarding how many of those people who are dropped in Bakersfield get off the streets and find their way back to their homes. This opinion piece reflects my observations of the local culture and the reputation of the town as a whole among investors who live outside Kern County and who continue to make profitable investments in Bakersfield..
Shocking news for outside investors
In 2006, the Bakersfield Californian reported that Los Angeles county shipped homeless into Bakersfield on Greyhound busses. (See L.A.’s homeless pushed into Kern by the Bakersfield Californian.)
More recently (March 2019), the Bakersfield Californian reports that the State intended to drop over 100 inmates at the Greyhound station, but the Governor argued to fix this problem because the release would be “larger than normal.” (See CDCR to release more than 100 inmates in Bakersfield on Thursday by the Bakersfield Californian, and Why some inmates won’t be released in downtown Bakersfield by the Bakersfield Californian.)
Bakersfield locals accept the homeless and the inmates as a fact of life. Because of Bakersfield’s central location and Kern County’s high proportion of prisons, the State frequently uses Bakersfield as a dumping ground. The apparent expectation by government officials is that the inmates will call a friend, get cash and buy a ticket to their homes, but instead they wander the city without a plan.
Bakersfield is still a great place to invest
I enjoy seeing the shock when I answer the question: “Is homelessness a problem in Bakersfield?”
Visiting investors always ask. And I always tell it to them straight. But, Bakersfield is still a great place to invest!
When you invest your money in Bakersfield Real Estate, you carefully review the numbers. Local residents need places to live. They invest in home security when necessary. Home insurance premiums reflect the larger risks, but the net income shows profits. Just like all investments, the bottom line shows you everything you need to know as an investor.
Because the bottom line reflects the risks, you know that your investment will generate a quality return despite the increased risks. Use the capitalization rate to evaluate the quality of your investments. The reason why I focus on the capitalization rate is this metric takes into account expenses as part of the formula. When the insurance premiums go up, the capitalization rate goes down. When the gross rents go up, the capitalization rate goes up. The capitalization rate normalizes all the variables and gives you a reliable prediction of the quality of your investment.
Smart Investors flock to Bakersfield
The Bakersfield Association of Realtors tracks all sales in Bakersfield. Over the years 2016 through 2019, there is an average of 345 investment properties sold every year. More impressively, the gross sales has been increasing every year. When investors have positive experiences, they tell their friends, and our gross sales go up.
In 2019, we had our best year ever with $114.2 million in gross real estate sales for investors. The question is, can you stand by while other people get rich on investment properties in Bakersfield, while your money sits in the bank?
If you have questions about how to invest in Bakersfield, then call me.