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MarcR

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Reply with quote  #1 
Has anyone had experience investing in Fresno? It seems that most of the properties listed have much better returns than nearly anywhere in Southern CA. Is this due to low rental demand, crime, or other things? What are some of the reasons to avoid Fresno?
Greg

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Reply with quote  #2 
Have  you been there  recently? Some people say it looks like a war zone with the massive homeless. 
larrywww

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Reply with quote  #3 
1. If you are living in San Diego, then Riverside and San Bernardino counties are alot closer.  From San Diego, you are talking about a 4 to 5 hour commute.  

2. Fresno is a very isolated market.  If you are determined to go into this area, why are you bypassing Bakersfield?  Or even better, Riverside and San Bernardino and Imperial counties.  These are all alot closer than Fresno.

3. Bruce Norris gave a county by county breakdown in his leadup to his February 2017 report.  I recall that he said that San Bernardino and Riverside counties had further room to run.  I don't recall that he said anything about Fresno.

4. Norris says a recession in 2 years (his guesstimate).  Followed by 10 years of almost no appreciation (3% per annum).  But these estimates are primarily for those who have already invested and are harvesting returns.  I don't recall him saying anything about jumping into the market this late.

5. Most people haven't really digested what Bruce Norris was saying in his recent report.  California is traditionally seen as a volatile state where you can earn alot of money by appreciation.  Forget about that, California is now a cash flow state like Texas and Oklahoma used to be.  The downside is that you aren't going to purchase your properties for the kind of low prices that cash flow states traditionally have.  So you have to think twice before you purchase in California going forward.  If all you can look forward to is 3% appreciation, then may not be worth it. (Until we reach a new cycle, maybe in a decade).

The real question, in view of Bruce's report, is what are the prospects going forward.  If prices are only going to increase 3% per annum---and we have an inflation rate of 2%----maybe it isn't such a great deal to be a real estate investor in this market for a whopping 1% appreciation---during this particular cycle.
rickencin

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Reply with quote  #4 
So, Buy and Hold awful, Flippin' awesome!
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Rick
larrywww

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Reply with quote  #5 
No, buy and flip, sell and flip, flip and flip . . . until you make your first million.

I know this is true because I saw it on cable tv.

99% of those asking for advice have no money, zero.

They are interested in buying and holding 100% financed purchases---with the hope of cashing in quick---which is a very different scenario.

And in the current market, they won't get saved by the rising tide that is supposed to float all boats, etc.

The current market is, according to Bruce, flat, flatter, flattest----for the next decade---no bounty for making big bets in this market.

Plus, a recession within the next 2 years----not exactly a rosy outlook.
kaihacker

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Reply with quote  #6 
Fresno like most cities has everything from war-zones to large acreage estates. If you were thinking about investing there, I would suggest spending a weekend and getting to know the lay of the city.  

But if you are already looking at the central valley, Bakersfield has experienced less upside since the 2009/2010 bottom than most areas in CA.  The oil crash and concurrent drought were hard on Bakersfield.  Amazingly the economy has been growing despite the factors.  Both are looking better.  Oil has had big gains from the bottom and most layoffs are in the past.  Companies cut as much as they could and some are now hiring where they over did the cuts.  If oil had another drop, there would not many layoffs as the industry is pretty "lean and mean" now.  And as most know, there will be no shortage of surface water for the farmers this year (and with storage, next year as well...at minimum).  
Becuase growth in logistics/warehousing the low end of the market has stayed strong.  But the job losses in the high paid oil sector hurt the higher end home prices. There are still deals to be had.  Multiunits seems to be pretty bubbly lately. Massive investment from out of the area investors has pushed cap rates down. 



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Gene Hacker

Passive and active real estate investment opportunities.
http://RiverLakeRE.com riverlakere@gmail.com

Home Inspections in Bakersfield and all of kern county:
http://bakersfieldinspections.com
larrywww

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Reply with quote  #7 
Thanks for the update on Bakersfield and Fresno, Gene.

Fresno is a very strange place with varied housing situations.  I know that Clovis and eastern Fresno nearby have good neighborhoods and schools.   But this area is way too distant for me to have any accurate evalutions.

I didn't know that Bakersfield was doing so poorly, again, I've never bought any properties anywhere close.

Bruce Norris did give a prediction about both Kern and Fresno counties in terms of what their probable maximum housing prices are going to be during this cycle.   Bruce felt the previous maximum price had to be reduced since the loose lending practices had created an artificial high. (This was the TNG Investor Quarterly for 1/2017 that was posted on a thread here.)  His basic conclusion seemed to be that the coastal areas are close to (and in some cases, above) their previous max prices, the inland areas no so much.  The picture he gives is that there was an aborted price rally that had started on the coast but that didn't make its way inland before losing steam.


I tend to believe that the repeal of Obamacare will hit Kern / Fresno maybe a bit harder than elsewhere since health care was one of the areas where salaries are above average in inland California.

These days I am mainly curious to see what people think about  Bruce's prediction that California is about to become a cash flow state (with maybe 3% appreciation)----and this an entire decade.

Actually, the impact of this prediction may be less serious in Fresno and Bakersfield----even though according to Bruce, in a normal housing rally when animal spirits take over, everyone starts drinking the koolaid and getting euphoric.  That part of the rally is apparently not going to happen this cycle---we are stuck with relatively flat growth.  (Again, I don't know what is happening in your areas).

Wow, I never saw that coming.  Sure, you can still troll for forced appreciation during the lull but I think if one takes the prediction seriously that serious investors should begin to think of Plan B---or even Plan C.

I am not at all happy about this idea---though I'm not saying Bruce is wrong.

Bruce also has another prediction----a recession within 2 years---though he doesn't identify which of the many economic forces he has cited will be the primary driver.  He doesn't say what impact that will have on real estate, though I assume the price rally will stop (if it already hasn't).

Bruce is going to give another market presentation tomorrow (the annual coldwell banker presentation he gives every year), so we will see if that sheds any light.

larrywww

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Reply with quote  #8 
My feeling is if you are going to buy in ghetto areas, I'm not convinced you couldn't find one closer to home.  The only thing worse about buying ghetto close to home is buying ghetto in Fresno, where you don't know the neighborhoods and probably don't have handymen or realtors, etc.

Mind you, I am NOT advising anyone to buy in dicey areas.  But if you are hell bent, I'm just saying, there are probably equally good choices closer to home.  Better the hell that you know than . . .Well, you get the idea.
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