Bakersfield, California has quietly emerged as one of the best cities in the state for rental property investment. With its low cost of entry, strong population growth, and high rental demand, Bakersfield provides a great foundation for beginners to build passive income through real estate. This guide outlines how to generate rental income in Bakersfield, including investment strategies, compliance steps, and the top-performing neighborhoods for returns.
Why Invest in Rental Property in Bakersfield?
- Affordable Real Estate: One of California’s most budget-friendly markets with median home prices far below coastal areas.
- Strong Rental Demand: More than 45% of Bakersfield residents rent their homes, driven by affordability and population growth.
- Excellent Cash Flow Potential: Rental yields between 7%–10% are common, making Bakersfield ideal for cash flow-focused investors.
- Growing Economy: Key industries include oil & gas, agriculture, logistics, and healthcare — providing job stability and steady tenant demand.
Top Strategies to Generate Rental Income in Bakersfield, CA
1. Long-Term Residential Rentals
Purchase single-family homes or duplexes in neighborhoods like Oildale, East Bakersfield, or Southgate and rent them out on 12-month leases. These areas offer affordable acquisition costs and stable tenant demand.
2. Section 8 Housing
Partner with the Housing Authority of the County of Kern to rent to tenants using Housing Choice Vouchers. This strategy offers consistent government-backed rent payments and lower vacancy rates.
3. Mid-Term Furnished Rentals
Target traveling nurses, agricultural contractors, and corporate workers by offering furnished units for 1–6 month stays near Bakersfield Memorial Hospital or the downtown core.
4. Student Rentals
California State University, Bakersfield and Bakersfield College support demand for shared housing or room-by-room rentals. Properties near Southwest Bakersfield or Hillcrest are well-suited for this strategy.
5. ADU Rentals
Build or convert a garage into an Accessory Dwelling Unit (ADU) on single-family lots to generate an additional income stream. This is ideal in areas with larger lots like Rosedale or Greenacres.
Legal Requirements for Landlords in Bakersfield
- Business License: Required for all rental property operators. Must be obtained from the City of Bakersfield Finance Department.
- Rental Property Inspection: Properties may be subject to city or county housing code inspections depending on complaints or zoning area.
- AB 1482 Rent Control: Applies to most properties built before 2005. Limits annual rent increases and outlines just cause eviction protections.
- Lead Paint Disclosure: Required for all properties built before 1978. Landlords must provide EPA-compliant disclosures to tenants.
- Short-Term Rentals: STRs are regulated and may require additional permits and TOT (transient occupancy tax) collection. Verify with the city planning department.
Estimated Monthly Costs for Rental Properties in Bakersfield
| Expense Type | Estimated Monthly Cost |
|---|---|
| Property Taxes | $150 – $450 |
| Landlord Insurance | $60 – $130 |
| Maintenance & Repairs | $100 – $250 |
| Property Management (optional) | 8% – 10% of rent |
| Business License Fees | $50 – $150/year |
Best Neighborhoods in Bakersfield for Rental Investment
- Oildale: High yield area with affordable housing — ideal for Section 8 and long-term rentals.
- Southgate: Stable rental market with a mix of single-family homes and small multifamily properties.
- Rosedale: Higher-end suburb with larger lots and ADU potential.
- East Bakersfield: Good for cash-flow investors and workforce housing.
- Downtown Bakersfield: Walkable area suitable for mid-term rentals and professionals.
Tax Benefits for Bakersfield Landlords
While California taxes rental income, landlords can deduct a range of expenses to reduce taxable income:
- Mortgage interest and property taxes
- Depreciation of property and capital improvements
- Insurance, repairs, and utilities
- Management fees and legal/accounting services
- HOA dues, cleaning, and advertising costs
STR owners must also register with the California Department of Tax and Fee Administration (CDTFA) and remit transient occupancy tax (TOT) to the local government.
Tips to Maximize Rental Income in Bakersfield
- Screen Tenants Thoroughly: Use credit, criminal, and eviction history checks to protect your investment.
- Buy Value-Add Properties: Slightly outdated homes can be renovated to boost rent and equity.
- Leverage ADUs: Consider adding a legal second unit on larger lots for dual income streams.
- Stay Compliant with AB 1482: Be aware of rent caps and eviction rules affecting many residential units.
Conclusion
Bakersfield is a top-tier market for beginner real estate investors in California. Its affordable pricing, strong rental demand, and cash flow potential make it an excellent choice for generating rental income. With a sound strategy, legal compliance, and a focus on tenant quality, investors can build long-term financial stability in this growing Central Valley city.
Need assistance with licensing, property setup, or investment strategy in California?
Reach out to PEAK Business Consultancy Services — your expert partner in rental income planning and real estate compliance in Bakersfield, CA.
