Ready to invest, but unsure of where to start? You’re in the right place. Historically, our market has been a magnet for investors seeking cash-flow investments. With attractive property prices (compared with major markets), affordable cost-of-living and steadily low vacancy rates, Bakersfield continues to be a successful first step for many new apartment investors.
Regardless of your experience level, the step-by-step plan below will help guide you through the transaction process. There is one key task to complete before you start hunting for investment properties: contract with a multifamily real estate agent like Marc A. Thurston.
Why do I need a multifamily specialist?
Apartment real estate is significantly different than other specialties—that includes general commercial real estate and (especially) residential real estate. An experienced multifamily agent must be familiar with submarkets, rent pricing history, vacancy rates, the particulars of various apartment structures and the additional rules and restrictions unique to this specialty. All these factors will impact the profit margin of your investment property. To ensure that you have all the details needed to make an informed decision, we strongly suggest you work with an experienced agent like Marc A. Thurston.
Why do I need to sign a contract?
A formal contract allows both parties to clarify expectations right from the start. Once we agree to work with a client, a signed contract demonstrates to us that you have serious intentions about buying a multifamily property right away. Likewise, clients should expect that the full force of our market research and professional networks will be activated immediately to find suitable properties for your review. Without a contract, any work performed can result in lost time and resources for all parties.
Step One - Prequalification & Market Research
- If you require outside financing for your property purchase, you will need to determine the amount of the qualifying loan. This provides us with the information needed to identify the type, size and location of properties within your budget. Next, we use several methods to evaluate prospective properties:2
- Submarket: We have divided the Bakersfield apartment real estate market into six geographical zones. We then track the average prices and market activity of all multifamily properties within the boundaries.
- Comparables (or “Comps”): This measurement tool is based on a survey of the area near to the property in question to determine if the asking price is consistent.
- Price Per Unit: By dividing the property price by the number of apartment units, we create a more accurate property-to-property comparison than price alone.
- Gross Rent Multiplier: The ratio of the sale price and annual rental income (before expenses) will yield a number that represents the number of years it would take for the property to pay for itself in gross received rent.
- Cap Rate: A formula to determine the rate of return on an investment property based on expected rent income.
Step Two - Buy the Business
Once you’ve decided on the property you wish to purchase, Amy will coordinate the next steps with you. Together, you will make the appropriate notification to the seller, make financial arrangements and coordinate a series of inspections. It is extremely important that you stay in close contact with our office during this period—many of these tasks have strict deadlines for completion!
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