Flipping Over L.A.: Out With the Old, In With the New

On March 10th, the Los Angeles Times printed an article by Alejandro Lazo titled, “Investors Flip over Highland Park Homes.”  This article details how investors are purchasing physically and/or financially distressed homes in Highland Park at severely discounted values, and renovating both the interior and exteriors of the homes.  Once the homes are upgraded, the investors put them back onto the market, where they are quickly snatched up by young hipsters and urbanites, yielding great returns for the investors. 

While Lazo’s article does a good job of summarizing the L.A. flip story, his article only begins to illustrate the dramatic home flip activity in the denser, urban areas of Los Angeles. 

In the last 24 months, the Land Advisors Organization Urban Infill Team (Richard Byrd, Tim Barden and Chris Gomez-Ortigoza) has utilized a proprietary method to create a “Flip Analysis” in areas including Hollywood, Silver Lake, Mid-City, Echo Park, Eagle Rock and Pasadena.  In completing each Flip Analysis, the Team is able to draw conclusions and provide concrete information regarding the values that new home buyers place on turnkey homes in a specific neighborhood.  Providing the Flip Analysis creates a level of comfort for builders and developers assessing values, as it illustrates the tremendous demand each flip creates.  More importantly, it shows land buyers the range of values they can expect for a new development in neighborhoods that have little to no recently built, comparable projects. 

The chart below illustrates average values associated with a handful of “Flip Analyses” that we have run during 2011-2012.

The data above represents only averages associated with flips in each neighborhood.  The value increase for individual flips varies with the amount of work done on the home.  Homes with minimal improvements, such as new sod and paint may command a 10-20% increase in value.  Completely gutted and remodeled homes regularly command 50-100% increases in value and more than double in value in some instances. 

As a final snapshot of the Los Angeles infill market, a recent flip analysis illustrated that approximately 18% of flipped homes in Eagle Rock sold for 3% or more above their flipped asking price.  With multiple offers for each property, the turnkey home values are being bid up above asking prices and are creating higher values that positively affect the entire neighborhood.  In today’s market, this is a great sign of what is to come and shows the demand for both new and turnkey homes is alive and well in Los Angeles. 

If you are interested in hearing more about the L.A. Flip Analyses, please contact Land Advisors’ L.A. Urban Infill Team.

Source: Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 ext. 14; Richard Byrd, Senior Marketing Consultant, (626) 376-9840 ext. 13; and Tim Barden, Marketing Consultant, (949) 852-8288 ext. 30

PFAR MLS was used to source all resale information.

Urban Infill Team Facilitates 1031 Exchange Deal in Burbank

Land Advisors Organization – California Division is pleased to announce the closing of a 21-unit apartment building, where Steve Porretta purchased the Burbank property from Essential Assets, LLC for $4,200,000.

Land Advisors’ Urban Infill Team, which is based out of the firm’s Pasadena office, facilitated the multi-family property sale by assisting Mr. Porretta with a 1031 Exchange. 

In 2011, the Team assisted Mr. Porretta with the sale of his Silver Lake property, “Waverly Terrace Townhomes,” which included 63 unimproved townhome lots with a recorded final map.  

Mr. Porretta then needed to find a reinvestment opportunity and looked to Land Advisors’ market knowledge and extensive network of industry contacts for purchase options.  Through its list of industry relationships, the Urban Infill Team was able to source the off-market 21-unit apartment building, and represented Mr. Porretta and Essential Assets, LLC in the transaction.

“Mr. Porretta needed something very specific,” noted Land Advisors’ Senior Marketing Consultant Richard Byrd.  “By calling on our industry contacts we were able to provide several opportunities for Mr. Porretta to choose from.”

Read the Complete Press Release Here 

Urban Infill: War and Peace in the LA Basin

The Land Advisors Urban Infill team is currently working with several developers who have recently submitted tentative tract maps, are revising existing tract maps, or intend to submit new tract maps for for-sale housing developments.  The Team is seeing the highest concentration of activity in Northeast Los Angeles (Echo Park, Silver Lake, Eagle Rock, and Glassell Park).

The City of Los Angeles Department of Building and Safety’s September newsletter revealed that the City’s number of housing starts year-to-date is still low (-31% YOY).  However, plan check revenue is up (41% YOY), indicating an upswing of future housing supply.  Newsletter Sept 2011

Ideally located new home communities selling well-designed homes are showing strong sales numbers. In the third quarter, the Urban Infill Team led the closing eight single family attached lots at Lennar’s Playa Vista. In response to the growing demand for additional product in Playa Vista, Lennar closed the 2nd and 3rd lot take downs four months early. 

Los Angeles Land Use Update:  The Planning Department’s Code Studies Section unveiled late last week a draft ordinance that would allow the creation of site-specific development rules that could loosen-up laws on density, setbacks and open space requirements. The new process, called Planning Unit Development, is part of the Department’s 3-year-old effort to streamline the Municipal Code while also encouraging more public participation. Some might say those goals are as congruent as war and peace. http://www.landusela.net/2011/09/planning-dept-unveils-latest.html

Source: Tim Barden, Marketing Consultant, (949) 852-8288 x30, and Richard Byrd, Senior Marketing Consultant (626) 376-9840 x13, and Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 x14