HOUSINGNEWS REPORT
LOS ANGELES SPOTLIGHT
because you are not getting it as cheap as it should be to get a return,” said Ray Newton, CEO at Ocean Partners Investment, a real estate firm based in North Hollywood. “You have a lot of these investors who are doing development. … Small lot subdivision is the key thing right now … Take a three unit and turn it into a 19 unit, that sort of thing.” Following the last housing downturn in Los Angeles, Newton began buying non-performing mortgages — or notes — in the Los Angeles area and across Southern California. He said he’s found a particularly profitable niche in buying notes backed by commercial property. “We have a huge list of investors who like the non-performing loans. Since we’re in a seller’s market, REOs aren’t attractive anymore because investors bid them up to fair market value,” he said. “Nobody really cares about the commercial guy; everybody cares about the residential guy. But there was a quiet tsunami (of commercial defaults).” Uptick in NODs Newtown sources many of his non- performing note deals by tracking commercial property notices of default (NODs) on RealtyTrac, and said he has observed a recent uptick in those NODs. “We’re starting to see an influx now … in LA any given month we are starting to see 30 to 40 loans go into default. In residential it’s probably triple that,” said Newton, who added that he’s been
Los Angeles County Median Home Price Trends YoY Pct Change Single Family & Condo Median Sale Price
Aug 07 $605,000
Jun 16 $565,000
$700,000
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The flippers have kind of gone aside. Small lot subdivision is the key thing right now … Take a three unit and turn it into a 19 unit, that sort of thing.”
Ray Newton CEO, Ocean Partners Investment in North Hollywood
adopted a similar strategy leading up to the last housing bubble burst. “In 2008 everything started going up and up until it finally crumbled. What goes up must go down … we just held back and then you started see all the short sales come around, and (we) started bidding on those things and stayed in business.” A total of 5,470 single family homes and condos were flipped in Los Angeles County in 2016, accounting for 7.6 percent of all home sales. That home flipping rate was down 2.3 percent from the previous year, counter to the national trend where the home flipping rate
increased 3.1 percent in 2016 compared to 2015.
Real estate investors completed 78 home flips in Norwalk zip code 90650, the third highest number of any zip code in Los Angeles County and representing 9.8 percent of all home sales for the year, according to ATTOM Data Solutions. But the home flipping rate in Norwalk was down 12 percent from 2015. (see home flipping heat map on Page 20.)
Small Lot Subdivisions Soaring “The flippers have kind of gone aside. There’s not a lot of room anymore
ATTOM Data Solutions • P14
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