Lender · Hermosa Beach, CA · Member since 2015 · 70 posts · 32 votes
Just curious to see what most Los Angeles area investors are looking for these days. I've noticed a significant change in the demand for fixers in the LA area over the last year. A year ago, you could list anything that was a fixer and it would sell with multiple offers over asking within a day.
Now most of my investor clients are passing on most traditional fix and flips even off market properties with nice spreads that they would have swooped up year ago. Almost all of them have shifted to higher end markets and are only buying complete tear downs and doing new builds or smaller MF complete rehabs.
The market has softened somewhat but there is still a high demand in most of the entry level neighborhoods. Just wondering what other investors are focusing on in the LA area.
I own places in Hollywood Hills and OC, and I shop around a but in Hollywood Hills. What I'm seeing is that the asking prices are quite a lot higher than selling prices these days. There's always that gap, but right now it's gotten very large. Great houses priced right sell very fast. The overpriced stuff sits forever, buyers just won't touch them. I agree with Cedric, a lot of flippers are putting lipstick on a pig. Once in a while it works, if the place has a great view or something else that interests buyers. I see old houses on tiny plots of land, and they're all decked out and staged....they sit forever. I see some houses getting pulled off the market after multiple price cuts and they end up as rentals.
I've also see absolutely TERRIBLE stuff priced 25-30% over market value, and this is bad for all sellers. It sends a message to buyers that the market is unstable and sellers are crazy. Buyers pull back and start to say "hmmm, I'll wait for the next crash." Buyers are in no rush these days from what I am seeing, maybe because of the media talking about the economy slowing down.
@Julian L those are great numbers, would you share what part of LA? zip codes? I'm actively looking to buy 2-3 flips under $500,000 each. If you're an agent I'd like to use you to buy the houses if you want.
My last deal was in zip 90018 on Ruthelen St, I paid $510K put in $85K and sold it for $760K in 17 hours and she closed in 21 days with 30% down payment
@Kenneth Kussman The last few deals I've done the buyer all depends on the price point and location of the home.
$360,000 SFR in compton was a first time buyer, she was a teacher who wanted to be in that area. She did an FHA loan. Sold in 8 days full price
Silverlake $635,000 sales price was bought by a couple in their 30s with no kids. They got the 25% downpayment from the girl's parents, both people work in LA make probably $150,000 combined income. Sold in 14 days 96% of list price
Watts Duplex for $350,000 buyer was a nice family who owns a lawn care business, bought it with an FHA loan, sold in 7 days full price
Jefferson Park $759,000 sales price, it was bought by a nice lady in her 30s, she makes $15-20,000 per month as a financial adviser and put down 20% herself
Long Beach $500,000 sales price, bought by an investor in a 1031 exchange, he paid full price all cash and closed in 21 days. He sold a 10 unit in Inglewood and needed to buy $2,000,000 worth of property immediately , as the seller I had good luck and good timing. He converted the garage to an apartment and he gets $4,000/month rent on $500,000 invested
A friend flips in Highland Park and his buyers are all over the map. 20 something French girl who obviously has a rich family paid $880,000 cash for a house. Elderly couple paid 1.1M cash. Another buyer was a music producer, paid 1.2M cash. Another buyer owned 3 restaurants and put down 30% on $850,000. Another one was a husband and wife who are both engineers and make almost $360,000/yr they put down 20% on $869,000.
If you go into the inland empire the prices are lower and almost all of my flips are sold to buyers with 1% down, 3.5% down or 100% financing. I cant think of any sales i've done in the inland empire where the buyer put down more than a 5% downpayment
I am currently whole saying and representing an investor client in the SoCal area so I find this topic very interesting. I find markets like Inglewood and Culver City to be still good for aggressive returns. But yeah beyond that, I find myself searching for those needle in a haystack, adjudicated property deal. I've found good deals in Roseda, Pasadena, etc. But they are a dime dozen and you really have to work hard for them i find.
@Kenneth Kussman entry level neighborhoods in LA are primarily in south LA because the prices are lower like Jefferson park, Crenshaw, west Adams, Vermont square, etc. There have been quite a few new young families moving into the Vermont square area (where we live) and they’re all young professionals buying their first home in LA.
@KJ L. VA, CALHAFA, USDA, SILENT SECOND MORTGAGES, last sale in Perris they got 3 LOANS but they never told me that. Somehow it still closed in 30 days! I only found out buyer got 3 loans by accident, escrow told me when they got approved. It was supposed to be 1 loan but escrow slipped up and said "yeah! buyer got approved for all three loans..."
I was like "......uh....what?" Buyers are totally tapped out. Rialto buyer had to borrow $800 from his cousin to buy a new water heater LOL. People are crazy.