My Monopoly Project – The Jon Johnson Story

On August 2019, I received the keys to my new house in Bakersfield, CA and began the Monopoly Project journey!

Background

Bakersfield is a mid-sized city near Central California. It is the most northern city in Southern California; it’s less than 2 hours from Los Angeles and 4.5 hours from San Francisco (driving). Bakersfield is very comparable to the Phoenix Metro area in many ways. First, real estate prices are very comparable (excluding ritzy areas in PHX). The climate is very similar as well as the diversity of its culture and politics.

Bakersfield receives its fair share of “hate” from people in other parts of California. Bakersfield is a middle-class community where its biggest industries are in agriculture and oil extraction. Also, there are a few state prisons near Bakersfield. Below is a comment from an internet user who shares his opinion of Bakersfield and Phoenix:

“…they’re both crapholes in the desert filled mostly by economic losers who have been forced out of actually desirable areas I can’t think of anything they have in common. If forced to choose between the two I suppose I would have to pick Phoenix but thank god I don’t have to live in either place.”

Why Bakersfield?

Why did I decide to purchase a property in the middle of nowhere California? For many reasons, a few of them were:

1. I was priced out of Los Angeles, where I work and live
2. Bakersfield is an area where Real Estate prices are low for CA, but the rents in Bakersfield are raising, closer to levels of the bigger cities in the state.
3. I knew the area as I used to live near Bakersfield as a kid, with some family members living in the area.

The Process

I applied for an FHA loan, which allowed me to put down the least amount of cash as possible. There are some factors to consider when going the FHA route, such as:

1. Paying the mortgage insurance
2. Strict requirements on the habitability of the property (less supply of properties to choose from)
3. Property must be within a specific distance from where you work
4. You cannot rent out your property in the first 12 months of ownership

Beyond that, I was in a pretty good position as my income was based on the cost of living for someone living in the LA area. I had enough saved for the down payment plus closing costs and I had good credit. Finding a suitable property would not be as easy. My father was helping me with the process as it was my first time and he was an active Real Estate investor in the 2000’s. We initially went with a real estate agent who was not local to Bakersfield or even Kern County. This proved to be an issue, because it ultimately led to my father and I searching for properties, making the visits and negotiating the deals ourselves. After a few failed attempts to buy a property with the original real estate agent, we went with an agent who was local and familiar with the area. She was very helpful and efficient, which was a huge relief as my father and I both had fulltime jobs outside of the city of Bakersfield. Once we identified the property, the purchasing process was relatively quick, but with its share of stress and chaos. I purchased the property for $305k in 2019 and as of March 21^st, 2021, the property worth $341k. Not bad for my first deal in a craphole.

Personal Background

I am a graduate from the University of Southern California and I currently work there at the Marshall Business School managing our technology platforms as well as assist with Employer Relations. I travel internationally frequently, mostly in Asia (Shanghai, Hong Kong, Taiwan, Vietnam, etc.) for work and pleasure. I have a strong passion for entrepreneurship, and some of my short- and long-term plans for my Monopoly Project are to purchase multiple 4-plexes and another SFH in Bakersfield. I also would like to buy properties in Arizona, Colorado, Nevada and other areas of Southern California.

Note: This is a guest post to TheMonopolyProject. We will be hearing more from Jon as he continues his own personal MonopolyProject. Thank you, Jon.