This Tenant-Occupied Fixer-Upper Just Sold for $868,000 in Los Angeles

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Throughout the United States, homes are selling like hotcakes. That’s especially true in most areas of California, including in the Los Angeles metro area where the median home price hit $725,000 in May of 2021. That’s 35.5% higher than the median sales price during the same month in 2020.

With limited inventory in LA and a vast number of interested buyers, it’s not a surprise that homes are selling for ridiculous prices. But even in this red-hot housing market, it may come as a shock that a fixer-upper with tenants who aren’t leaving could end up selling for $868,000 — which is exactly what just happened.

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This fixer-upper came at a high price

On July 1, an 1,830 square foot duplex on Rosemont Avenue sold for a whopping $868,000. The property was first built in 1921, and the seller attempted to find a buyer numerous times in the past, but it was the latest listing in the ultra-competitive market that ultimately did the trick.

While a duplex in Los Angeles may seem like a bargain at that price, a quick look at the details shows why it’s surprising the house fetched so much for the seller. The property description reveals that the original duplex units are “in need of full cosmetic renovation.” Specifically, any buyer would need to replace kitchens, bathrooms, and flooring, which are often the most expensive areas of a home to remodel.

And the need for a gut renovation isn’t the only potential detriment to a possible buyer. The listing agreement also indicates there are long-term tenants living in the duplex units who the seller isn’t going to relocate. That means the new buyer will need to deal with having renters in the space who have to be enticed to leave if they want to actually do that remodeling work and move in or raise the rent.

While the listing agreement specified that one of the tenants would consider a “Cash for Keys” offer, this would mean a buyer who already spent a high six-figure sum to obtain the property would then have to come up with more money before even beginning the renovation process.

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The home, of course, was also sold “as is, where is.” There are few pictures on the real estate listing, though none are of the interior. That absence of photos is a good indicator that the inside of the property isn’t going to impress potential buyers.

Of course, the value may be in the land rather than the current duplexes. The listing description specifies that a buyer could start over and build three new units in what is a good location close to Echo Lake. But, that would mean a buyer would need to spend $868,000, plus the costs of relocating tenants — all to have to turn around and pay to knock down the building and build a new one.

Obviously, a buyer determined that this was worth the investment — but the high price this home fetched doesn’t bode well for those shopping for properties in Los Angeles.

If you are interested in finding a property in the LA metro area, or anywhere in California or the U.S., keep your head when it comes to making the purchase. Don’t get caught up in the frenzied seller’s market and end up taking out too large a mortgage loan or paying more for a home than it’s worth. Be sure to look at long-term trends in the area, set a budget that’s comfortable for you, and consider whether now is really a good time to buy a home.

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View more information: https://www.fool.com/the-ascent/mortgages/articles/this-tenant-occupied-fixer-upper-just-sold-for-868000-in-los-angeles/

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