Home flipping is back with a vengeance. The LA Times reports that 1,377 houses were flipped in Southern California in May, more than at any time since the peak of the housing boom back in June 2005. Flippers are real estate investors who buy houses, fix them up quickly, and then resell them for a profit.
Interestingly, a growing number of flippers are focusing on luxury homes, rather than houses in the middle of the market. The Wall Street Journal reports that flipped homes priced at $1 million or more jumped 35% in 2012 compared to the previous year. For these luxury homes, major overhauls are common, often with entire new floor plans and landscaping put in place, and sometimes over $1 million of renovations.
The “House of Rock” was created from an English Cottage – Tudor estate bought in 2010 by Elaine Culotti, an accomplished designer who is experienced in buying and renovating homes. The 10,000-square-foot home, on almost 2 acres of golf-course-adjacent real estate, was originally designed by master architect Elmer Grey (who also designed the Beverly Hills Hotel) and was outfitted by Culotti to serve as a professional sound studio, with state-of-the-art recording capabilities in almost every room. The studio alone has been estimated to have cost $3.5 million to build. Indeed, in renovating and expanding the home, Elaine Culotti spared no expense, assembling a dream team of designers, including Ralph Pucci, David Bromstad, Susan Cohen, Sami Hayek, Kelly Van Halen and Kyle Schuneman.
Another luxury flip is the mansion in Holmby Hills known as “The Reserve.” This two-acre home was listed earlier this year for $25 million by actors and business partners Jeremy Renner and Kristoffer Winters, who together have reportedly renovated and flipped more than 20 houses. The two purchased the mansion at auction for $7 million and outfitted it with renovated 14-foot ceilings, a cobblestone driveway, pool, spa and home theater. It has been reported they spent a total of $10 million on the rebuild.
The frenzy has also brought new interest in watching home flippers on reality TV. Home-flipping shows fell off during the recession: “Flip this House,” on A&E, was canceled in 2009, and Bravo’s “Flipping Out” changed directions after the second season to focus on interior design. HGTV premiered a new show in April, “Flip or Flop,” starring home-flipper Tarek El Moussa. Spike TV has “Flip Men,” and A&E is back in the game with “Flipping Vegas.”
The figure of flipped homes has stayed above 1,000 for the last 11 months, compared with fewer than 200 during low points of the recession. May, though, was unexpectedly high, and many experts predict that the home-flipping trend is only going to get hotter in the coming months.