Nestled along the breathtaking California coast and encircled by lush green hills, the Pacific Palisades presents a tranquil and beautiful retreat. It offers a range of outdoor activities like surfing and hiking, allowing residents to immerse themselves in nature just a short drive from the city.
The area is known for its high-end residents, including famous personalities, who can afford its elegant way of life. New homes are not regularly constructed in this coveted location, so it is also a perfect spot for flipping real estate. Keep reading for further insights into this remarkable region.
2023 Pacific Palisades housing market analysis
The Pacific Palisades has been in a seller’s market since last year, so prices will be higher, and homes should sell faster. However, in April, the average time it took to sell a home was 127 days; by May, the time increased to 154 days.
The median home price in May was $3,825,000, up 3.6% from last year. In April, 14 homes were sold, and the number more than doubled in May, with 30 homes sold. Of these homes, 50% were sold below the listed price, 7% were sold at the listed price, and 43% were sold above the listed price.
Areas to flip in Pacific Palisades
The Pacific Palisades is primarily residential but has a quaint downtown area known as the Village with shops and restaurants. There are more than a dozen neighborhoods to explore. Here are just a few of them.
Alphabet Streets
This primarily flat area is conveniently located within walking distance of the Village. It features cozy bungalows, considered starter homes, with a price range of around $1 million. Other homes in the neighborhood are priced between $1 million to $3 million.
The Highlands
The Highlands is a residential area that offers a variety of housing options, including condominiums, townhomes, and single-family homes. Certain streets within the site are gated, and some residences are part of the Summit Club, providing additional perks. The homes in this community are spacious, ranging from 3,000 to 6,000 square feet. The price range for homes in the Highlands is between $1.2 million to $6 million, while condominiums typically start at around $700,000.
Castellammare
This delightful neighborhood exudes European charm and features numerous villas. The street names are even Italian, adding to its allure. Although some properties have small lots, residents can relish the breathtaking views of the stunning Pacific Ocean. The homes for sale in the area range from $1.1 million to over $5 million.
How to find properties to flip
Have you heard the saying about buying the worst-looking house on the best block? It is not easy to find such a property in Pacific Palisades. Unlike in other areas, flippers here are not likely to come across short sales or abandoned buildings. While flipping in this area is challenging, even celebrities have been known to flip houses in the Palisades.
Multiple Listing Service (MLS)
The MLS website is an excellent resource for discovering available homes. If you do not possess a real estate license and have no intention of obtaining one, it is best to work with a reputable real estate agent. They can assist you in locating a property to flip.
Bank and lender websites
If flippers want to purchase homes that banks have in stock, also known as Real Estate Owned properties (REOs), they can search online using the lender's name and add "REO" at the end. For instance, type Bank of America REO. Some banks use brokerage firms, so it is best to contact them for further details.
Government websites
If flippers want foreclosed properties, they can check out government websites like the U.S. Department of Housing and Urban Development (HUD). HUD has a list of foreclosed properties that flippers can search for online.
Also, flippers can check with their local county or city tax assessor's office for a list of available homes. These lists are often available online, so search for the county or city office and look for tax forfeitures, delinquent tax rolls, or tax sale lists.
Auction websites
To find upcoming auctions, flippers can either look online or request a list from the county assessor's office. Remember to research any potential liens on a property before bidding to avoid unexpected debts.
Drive around the neighborhood
Another way to locate potential houses is to drive around the neighborhood. Look for homes in disrepair or with overgrown lawns, which may mean the home is foreclosed. If one is found, search online to check its status.
How to analyze deals
To determine whether a home's price is reasonable, it is essential to have a reference point. Researching the local housing market and home values online can provide valuable insights.
To make a profit when flippers purchase a house, they do not pay more than 70% of the home's value after renovation expenses, known as the ARV. This unwritten rule of 70% is commonly used to assess whether a property is a worthwhile investment.
Here is an example of calculating the ARV. Suppose that after a property has been renovated, it could be listed at $300,000. So the ARV is $300,000. Use the 70% rule to determine the most you should pay for the home.
Multiply the ARV by 70%.
$300,00 x 0.70 = $210,000
If you spend $50,000 on renovations, subtract that from $210,000.
$210,000 - $50,000 = $160,000
$160,000 is the most you should spend to buy the house. Spend less if possible. If you buy the house for $160,000 and only pay $50,000 to renovate, the profit will be $90,000 before accounting for taxes, closing costs, etc.
Use a flip housing calculator to calculate expenses in more detail.
Financing flips
Flippers have multiple options for financing homes, but traditional loans are not ideal due to their time-consuming nature. Some opt for home equity lines of credit or hard loans, but these options also come with risks.
- Getting a loan takes time
- There is stress with paying off a loan
- Finance charges are an added cost that could be avoided if the flipper paid cash
- Profits are smaller due to the added expense of the loan
That is why over 60% of homes bought by flippers last year were paid for in cash.
Find an ally
Navigating the world of flipping houses in Pacific Palisades can be a challenging yet rewarding experience. One of the keys to success is to find a reliable real estate agent who can assist you in finding the perfect property and effectively market it when the time is right.
This is where Kristin Jaman's expertise comes into play. With 30 years of experience as a realtor, Kristin possesses the knowledge and skills to help you buy, sell, or renovate a property. She has a keen eye for design and architecture, having worked on renovation projects in the past.
Whether you are new to flipping, have questions, or are interested in purchasing a home for sale in Pacific Palisades, Kristin is the trustworthy ally you need for your real estate venture. Contact Kristin today.