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Friday, September 19, 2014

Highland Park block emerges as a flipper hot spot


View Flipping Highland Park in a larger map
Homes for sale or in  in escrow shown in blue; red markers indicate homes sold during the previous year.

Photo from Redfin

Home flippers have been busy buying and selling homes across Highland Park for sometime now, but some corners of the neighborhood are attracting more attention than others. Take for example Burwood and Strickland avenues east of Figueroa Street, where in the past year six homes within about a block of each other have all shown the signs of being bought and sold by investors (typically, house flippers buy, fix and sell a property within a year).  Three of the homes, shown in red in the above map, sold within the past year while three (shown in blue) are currently on the market or in escrow.  The newest fixed up flip to hit the market – an 858-square-foot bungalow at 6217 Burwood (pictured) – went up for sale this past week at an asking price of $419,000 – that is nearly $180,000 more than what the house sold for in November, according to Redfin. If this Highland Park block gets flipped out, where will investors head next?

32 comments

  1. Yay! Highland Park! Let’s keep fixing up these beautiful old houses and get this neighborhood back to its former glory!

  2. As much as I love to see the gorgeous old houses fixed up, that’s not always what happens. Most flippers keep the outside somewhat original (if we’re lucky), but turn the interior into a modern condo style. Extraordinary, BetterShelter, ModOp, all these guys have a similar style that is not really historic but rather white-washed/darkfloored/open ceilinged. Soon that style will be dated, and we’ll wish they’d just kept them as close to original as possible.

    Plus, flipping is too expensive. I can afford a house under $300k and fix it up over the years on my own, but not one that’s been marked way up like these have. They’re in it to make a profit, we must remember.

    That being said, the house featured above is lovely. But I can’t afford it.

    • Dreamer,

      I noticed at least a dozen rundown shacks hit the market this week in Highland Park around your price range. Now is a great time to pick one up and start your renovations. Here is the 6-8 month play by play:

      – Get pre-approved for a $300k loan
      – Find a real estate agent to show you the shacks
      – Find a home you want that qualifies for financing (most of the really dilapidated homes that sell cheap will not qualify because of significant deferred maintenance, failed plumbing systems, faulty electrical, unsafe living conditions, etc.)
      -Make your offer along with 30 other people
      -Get your offer rejected
      -Find a new home – make a higher offer
      -Get your offer accepted
      -Negotiate with the seller to make necessary repairs to qualify for financing since the water heater is leaking, the sewer line is cracked, and the circuit breaker trips ever time you turn on the bathroom fan
      -Close on the home and move in (keep most of your stuff in the garage because it is going to get messy in the house)
      -Find a designer, contract, and possibly structural engineer to get plans made for any wall modifications, kitchen design, bathroom design, etc.
      -Submit plans to City of Los Angeles for approval
      -Pay permit fees between $200-$2000
      -Find materials needed for renovation (kitchen cabinets, plumbing fixtures, electrical fixtures, appliances, flooring, bathroom tile, doors, windows, roofing material, hardware, garage door, interior doors, paint colors, door, window, and floor molding and casing, landscaping, etc.)
      -Find plumber, HVAC contractor, foundation contractor, electrician, roofing contractor, framing contractor, tile contractor, flooring contractor, trim carpenter, landscaper and get at least 3 bids each so you don’t get ripped off. – OR – you can hire a general contractor to handle most of this, but your cost will go up 10-40%.
      -Hire contractors and begin construction
      -Coordinate and manage the various contractors, city inspectors, etc. from your day job (a bit tricky, but I’m sure you will manage)- These people will be in your personal space for the next three months (I bet that sounds like fun)
      -Find some great local restaurants and public showers because you will not have a functioning bathroom or kitchen for at least a month
      -Hope you don’t go over budget and run out of money before everything is done
      -Complete your project 2-6 months later (depending on construction management experience level, but I’m sure you have tons of experience so it will probably be less)
      -6-8 months later and $75,000 poorer, you are finally done. Wasn’t it all worth it?

      • Thanks for the condescending insight. I look forward to pursuing my dream of owning a home I can be proud of and improve over the years.

      • Hilarious! Thank you HPF for doing all the hard work for me…it will be much appreciated when I finally buy my home this year. Dreamer…wouldn’t you rather pay a bit more over 30 years than cash up front right now with all the months of renovation headaches? I put a new floor in my kitchen last year and couldn’t wait till those dudes from Linoleum City left–and that was just one day! I think what you guys are doing with the renos is really nice..a bit too much crazy exterior color, a bit too much wood railing and whoa baby on the wood chip landscaping…but all in all nice aesthetics. I cringe when I look at something you haven’t renovated on Zillow or Redfin…scary!

  3. Send them over to El Sereno. Specifically University Hills. I bought a house up there 2 years ago because I was priced out of everywhere else on the east side. There are some nice views and a lot of homes that could use a good flip. Best of all, real estate is CHEAP.

  4. Greed is good….and so is change. Although I’m an advocate of gentrification, the prices
    On most of these flips is too high. Buy for 200k and sell for 425k is just not justified. There are a few exceptions, but most are cookie cutter flips…and know you’re seeing flippers attack this area that have zero sense of style and craftsmanship. So it’s buyer beware….

  5. We live on Strickland and couldn’t be happier with the upgrades to the homes in the surrounding area. For the most part the investors that have flipped homes on these blocks have done amazing quality work. I hope they keep it up.

    • I love our street! I only see it getting better as more people move in who care about the homes and the neighborhood. See you around the hood Joey!

  6. As one of the tradespeople who worked on this house, I appreciated that the owners were interested in doing more restoration than one might think investors would do.

    Period doors were sourced, existing original windows were restored and new Douglas fir double-hung windows replaced aluminum sliders.

    After seeing the final product, this is a house I can imagine living in. That’s not the case with many of the “name” flippers.

  7. Saw this house in Burwood over the weekend. This is one of the nicer flips. I love that they kept the old windows and changed the glass to double pane, rather than taking them out and putting in vinyl windows. The house on the corner of 6108 Garrison used cheap building materials. The cheapest double vinyl windows (not double hung and not swing out for easy cleaning).

  8. I for one love what has been happening and have ti disagree about the quality of the work been done on these homes. In my neck of the words(Weaver Street) there are about four flips which are taking place or have already happened within a block of me and I have been watching the progress. I am in construction , myself and have been impressed with the time and care these guys have been doing. Just two doors down from me “Muse Reality” (which do flips) spent about six or more months on the home putting in new foundation.plumbing , roofing and electrical. They also took the time to put in period doors and windows with real hardwood floors. They were great and spoke with the neighbors and were upfront about there intentions.
    Now you are correct on one front some of the flips have had the same tired modern interior which will become dated in the years to come.

  9. Here here, Dreamer!

  10. The only people complaining are those that don’t own property or can’t afford said properties.

    Just focus on paying your rent.

    • So true. Renters love to complain that evil flippers make the neighborhood overpriced which is simply not true (buyers make the neighborhood overpriced by buying too high).

      But if renters want to buy, they need to take risk just like the flippers. Maybe they should venture into an area that could be the next Highland Park…El Soreno, Montecito Heights, Cypress Park, etc. These neighborhoods are still cheap and they will eventually appreciate like Highland Park.

  11. @Buttplugger– hehe, I typed buttplugger– I totally agree. If people are gonna split hairs about the tastes and varying qualities of these flippers and not look at the bigger picture, then let ‘em keep paying their rent. I’ll take the house and those like it featured above in my neighborhood over decaying stucco’d sh*tholes anyday. I love my neighborhood and am so glad changes are happening!

  12. haters gonna hate- especially the racist bastards on REDFIN LA forum.
    meanwhile NELA keeps chugging along…..

  13. I think it’s a good thing that this is taking place in Highland Park and other east side neighborhoods. It gives people in the neighborhood a sense of pride and causes a chain reaction of home improvements throughout the area. Another good place to look for cheaper prices with beautiful homes is Boyle Heights. It’s still very afforadble, but it looks like the flippers have arrived and prices are already starting to go up.

  14. Our Client just ‘flipped’ a beautiful remodel in Highland Park at 6051 Fayette Street. Several of his design elements included: Original panel doors; Restored windows; Restored door hardware; Vintage lighting; Custom open shelving; Pergola/carport with handcrafted, architectural detail (designed in partnership with Chris from Angel City Builders, neighbor across the street); Eco-friendly landscaping; Cedar-lined closets in both bedrooms – naturally moisture, odor and moth resistant; Eco-friendly cork flooring in kitchen which is naturally moisture resistant and easy on your feet; plus a host of other benefits. We look forward to finding his next venture and creative remodel!

  15. I was one of the ones that just bought the above mentioned Strickland homes this past year and although it was high priced based on comps in the area the amount of work and money that went into the house was well worth it. The way I see it is pay more now or pay even more for many years to come in trying to do it yourself through blood, sweat and money. When I did the math the company that flipped the house didn’t really make a huge profit anyway. They kept much of the original style of the house and did a good job of fixing or covering up much of the past 100 years of add-ons and changes. New foundations, kitchen, fixtures, plumbing, wiring, bathrooms, vaulted ceilings, larger living space, hardwood floors, new decking, renovated fireplace, fixed and cleaned up original windows, maintained original wood shingle look outside. They kept the look of everything with a contemporary edge that works with any style. It all makes me want to buy my neighbors houses and start flipping myself. But it’s a lot harder than you would think. See HP Flipmeister’s seemingly sarcastic comment on what it takes. Only negative about this flip was no central AC/heat and of course urban parking sucks! Hey but if I’m just drinking the Kook-Aid then damn the Kool-Aid tastes good ;)

  16. @Sliverbjw, Welcome to the neighborhood!!!

  17. I moved into this neighborhood twenty years ago stright from Ireland struggled and rented for years ,bought a house 13yrs ago,trust me home ownership is an asset to a neighbourhood.

  18. I am being condescending because for some reason, everyone wants to criticize “flippers” for making money. Flipping houses is a job just like flipping burgers or offering legal advice. Most don’t understand the risk, time, and money associated with flipping homes. It is a full time job that requires a specialized skill set and careful coordination because every day the project goes over schedule (or over budget), it costs more money. It is also very difficult to budget a rehab project because it is almost impossible to truly understand the scope of work until the walls are actually opened. For example, we began repairing the ceiling on a house and realized that a previous owner had removed a major load bearing wall and the ceiling was starting to collapse. This resulted in a lot of additional structural repairs that was not budgeted in initially. Also, most flippers operate as part of a group consisting of investors, managers, architects, designers, engineers, etc. which means the profits are distributed across many people, not just one wealthy millionaire at the top. On a more social level, flippers generally improve neighborhoods by beautifying the property and selling it to a buyer that respects the work that was done because they paid a premium for it (which means they maintain their property unlike renters or many of the adjacent neighbors). Flippers also generate a tremendous amount of job in a very depressed employment base. Construction and real estate jobs were hit the hardest during the latest economic downturn and flippers help kick start this employment base from contractors to real estate agents to escrow officers and appraisers. How many jobs have you generated this year…or ever? What has been your contribution to your neighborhood?

    Finally, if I make $50,000/net on a project, I split it with an investor and then with my partner. That gives me $12,5000 for 3-4 months of work or around $3-4k/month which is very modest for LA standards. Yet, when someone makes $3-4k/month flipping homes, they deserve to be constantly criticized (ugly paint, terrible workmanship, priced too high, greedy pig, etc.). In contrast, when someone makes $3-4k/month designing websites, managing a Best Buy, holding a boom mic, or opening bank accounts, they are left alone and/or respected for being hard working. How is this fair???

  19. @ HP Flipmeister

    Well said. You just check mated all the haters. I am also an active investor in LA County. Generally people have a huge misconception that we paint a house, landscape it, and magically sell it for a $150k over what we paid.

    The only thing I’ll add for all the haters that pout on the sidelines about investors. I dare you to try it and see for yourself how much hard work and stress goes into almost every project.

  20. Anybody here hating on flippers really need to look at the broader picture. What they are doing is beautifying the neighborhood, a neighborhood that has been neglected for decades. Each time a house gets flipped someone moves in that actually cares about maintaining their lawns and has pride of home ownership. This alone brings the neighborhood up and puts it in a positive light. Nobody wants to live in a neighborhood with graffiti, lack of amenities, poor schools, etc. They are contributing to the neighborhood in a positive way through job creation and restoring beautiful homes that have been neglected.

    If this is what you call gentrification so be it. If you call gentrification wanting to live in a safe place, with beautiful homes that are maintained than I’m the biggest gentrification supporter there is.

    All I know is Highland Park is moving in an upward trajectory with these flips and will continue to do so.

  21. wow that was fast. It’s already gone to sales pending

  22. Exactly. Pending already. Where are all the haters at now?

  23. Respectfulrestoration

    I can echo all the other commenters who say that flipping can be a good thing, when done correctly. This house kept period details, windows, doors etc and added modern amenities, yet kept a period feel. These are all things I strive to do when I restore a house. Let me point out that unlike a low budget, cheap-o flipper, they did a foundation retrofit and replacement. This is an optional repair that only benefits the future homeowner without really increasing the value to the flipper, from a sales point of view. Keep in mind that retrofitting a foundation is not required by code and is a really good idea, but it saves gorgeous old houses from eventual ruin. If this is not good for the neighborhood, then I’m not sure what is.
    By the way, I’ve never flipped a house but I’ve restored a number of them and the account given above was 100% accurate and I don’t think it was condescending, it’s true! Most people do not have the skills, the time or the inclination to restore a house properly and it will cost you double (or more) without the benefits of a professional to guide you along unless you are doing everything yourself. Which would take you 5 years or more.
    Kudos to a good job, and for also keeping the long term, good style and period details of the home and neighborhood, intact.

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