Is Los Angeles a great place to flip homes right now?

[Brandon Chaney]

I deal exclusively in distressed SFH in LA, and I've been getting mixed feedback from some of my investors lately. Some are running full steam ahead, but a few are running out.

The Los Angeles market has seen inventory drop over the past few months, pushing prices even higher. Tenant friendly laws have further pushed investors away from rental properties. Is there an imminent decline, or is now still a great time to flip in LA?

[Shiva Bhaskar]

Originally posted by @Brandon Chaney:

I deal exclusively in distressed SFH in LA, and I've been getting mixed feedback from some of my investors lately. Some are running full steam ahead, but a few are running out.

The Los Angeles market has seen inventory drop over the past few months, pushing prices even higher. Tenant friendly laws have further pushed investors away from rental properties. Is there an imminent decline, or is now still a great time to flip in LA?

Hey Brandon. We invest here (multifamily). I would say with flips in LA, if you can find fixer uppers and pay in cash, you've got some opportunities. My view would be to focus on non - luxury areas - if you can find stuff in B to C neighborhoods, probably a better bet. Still a lot of owner occupants there. 

Fixers are not attracting the attention they otherwise might in the B to C areas (outside of guys like you who are flipping), because most owner occupants right now really don't want to deal with contractors. I hear it all the time. They'll pay a little more for something where the work has been done. Folks like my parents, who bought a house that needed improving back in the 80's, seem to be less common today. 

Inventory is so low that you could do well with it. I am not sure that investors are running away from rental properties - there is a lot of foreign capital here, and they'll buy deals that are less than perfect to park cash. Stuff is definitely moving still, in the B to C class property category. A properties are having issues.

Good luck! 

[Brandon Chaney]

Originally posted by @Shiva Bhaskar:

Originally posted by @Brandon Chaney:

I deal exclusively in distressed SFH in LA, and I've been getting mixed feedback from some of my investors lately. Some are running full steam ahead, but a few are running out.

The Los Angeles market has seen inventory drop over the past few months, pushing prices even higher. Tenant friendly laws have further pushed investors away from rental properties. Is there an imminent decline, or is now still a great time to flip in LA?

Hey Brandon. We invest here (multifamily). I would say with flips in LA, if you can find fixer uppers and pay in cash, you've got some opportunities. My view would be to focus on non - luxury areas - if you can find stuff in B to C neighborhoods, probably a better bet. Still a lot of owner occupants there. 

Fixers are not attracting the attention they otherwise might in the B to C areas (outside of guys like you who are flipping), because most owner occupants right now really don't want to deal with contractors. I hear it all the time. They'll pay a little more for something where the work has been done. Folks like my parents, who bought a house that needed improving back in the 80's, seem to be less common today. 

Inventory is so low that you could do well with it. I am not sure that investors are running away from rental properties - there is a lot of foreign capital here, and they'll buy deals that are less than perfect to park cash. Stuff is definitely moving still, in the B to C class property category. A properties are having issues.

Good luck! 

Thanks for your feedback. As we suspected, the market has squeezed even tighter, pushing prices further upwards. We're doing a lot of business in the B to C areas. Owner occupants seem to be cashing out on their investments in these areas and newly renovated homes are selling left and right with low "days on market". I've recently been discussing more MFH in LA than in the previous months. Seems like there are plenty of people looking long-term in LA despite the tenancy issue. A-properties are still working for us, but 85% of my business is definitely in the B to C market. Still wondering how long this market will last. Are you 5+ units, or do you also buy 4 and under MFH?