Flippers Are Scoring

By Dave Fratello | March 14th, 2014

In a rising market, money chases opportunity. Find an underpriced dog of a property, add value with a quick remodel, and you can add value. Flip it and score.

Yes, flippers are back in Manhattan Beach. (We first noted this phenomenon in August last year.) Here are some of the most recent rehab projects to make deals.

3521 Oak (3br/2ba, 1900 sq. ft.) is built in a style you might call "modern Southwestern," with the interior getting a heavy dose of slick 21st-century finishes.

That upgrade was necessary. Last Summer, the same home was on the market but looking frumpy and almost hopeless. Location didn't help – across from the hotel parking lot and steps to Rosecrans. After listing at $1.200M, a tiny price for 1900 sq. ft. these days, the home traded to a flipper for just $1.025M. (Tinier.)

After that re-do, the flippers were thinking big. They were ignoring the location liability and asking $1.6M. Whew, that was a tough one.

They've cut $150K since to $1.449M, and added language to the public description: "Motivated seller encourages all offers." Translation: The flippers want their equity out to move on to the next project.

Now they've got an offer, and this one's in escrow. A sale anywhere near that price will likely hit the margin that the flipper was looking for.

Speaking of location-challenged modern remodels...

1650 22nd (3br/2ba, 1250 sq. ft.) was on the public market only last September, not quite habitable at the time with no kitchen and some unfinished walls.

Turns out they were just doing the prep work for a flipper, who paid $929K and went to town.

They opened up the living spaces a bunch, upgraded the baths, restained the floors, changed out the windows, and added some flair to the exterior with Ipe wood. (There's your new word for the day, pronounced "ee-pay.")

What they didn't do is move the house, obviously. And the location along busy Redondo Ave. would be a concern to anyone.

This one emerged at $1.299M in early January, cut $100K and now has a deal with a list price of $1.199M. A sale near that price should be profitable, though not tremendously so. It looks like a pretty big gamble given the location.

3112 Poinsettia (4br/3ba, 1750 sq. ft.) is not like the others. It's in a much better location and got much more than a surface treatment in the flipper re-do.

The home was feeling very dated when the re-do crew bought it (off-market) for $1.175M in April 2013.

The flippers here are one of the groups operating in town whose work we consistently appreciate. More so than your typical rehab artists, they add value by truly modernizing homes, moving walls or even adding square footage where necessary to take older homes into the new era. They bring a distinctive, but hard-to-replicate, sense of style to their work.

So 3112 Poinsettia was one of those remodels, a deeply serious project for a flip. You could look past the downsloping lot, tiny 4th bedroom, or other concerns, and just love the open, modern beach cottage.

In January this year, they dared to ask $1.795M for a cottage with 1750 sq. ft. The market said, "No! We'll pay more!"

The sale closed up at $1.875M in February.

Score.

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