Jeri Creson, Broker, Studio City, CA
When I invest and flip houses, either on my own, or with an investor partner, I. personally, like the Hollywood Hills, Beverly Hills PO, Encino, Tarzana, Sherman Oaks south of the Blvd. These are communities where a "problem" property that I am in a position to correct for far less than retail can bring huge profits. For example:â€¦one that is non-conforming to the neighborhood, or under utilizes the lotâ€¦a house in a very bad condition with a design problem. A really tacky house that has a floor plan that could go sleek and modernâ€¦A house that doesn't take proper advantage of an amazing view - or sometimes has a "perceived" problem such as minor slippage that turns out to be $5,000 worth of foundation work, straightening up piers, or correcting a washed out stem wall problem following a leakâ€¦.not $500,000 worth of geotechnical issues.
These are areas where deals can be had on the right property, and good, quality construction can be achieved (when you know a good crew), resulting in outstanding profits. The values for a very desirable houseâ€¦a "prestigious" houseâ€¦a well done, move in ready house, or sometimes, a house that accommodates a family trying to get into certain schools will always hold it's value and offer appreciation opportunities in these neighborhoods. Can you imagine a time when Beverly Hills will go out of fashion? There are greater risks in these neighborhoods, of course, as your initial investment is larger - you'll be picking up a "deal" for well over $500,000 - and it is absolutely necessary to keep your construction costs under control, but that same investment - in the right situation can gain ridiculous appreciation in a short period of time. Many amateur investors make mistakes here, thoughâ€¦ the "cache" of the location often will bring inflated bids for construction that are completely unnecessary - because contractors in LA know this: depending on the locale, more often than not, the sheer ego of the owner will allow you to overcharge, and they'll pay it, if only for bragging rights. You can't go "cheap" on construction here - it HAS to be quality, but it doesn't HAVE to be expensiveâ€¦it just has to feel expensive.
I regularly see kitchens that cost $200,000 that I could have duplicated almost identically for $35,000,,, bathrooms that cost $20,000 that could easily pull off the same design appeal, and offer similar product quality for $8000. The profit is in the construction know howâ€¦an eye for good designâ€¦and the ability to spot an opportunity. I love to do these projects, and am always open to investment partners who have some time to manage, while I direct, and we both share in the profits.