Some investors are betting that renovating and flipping million-dollar properties is the next big opportunity in the housing market. 
 
Investors had been mostly focused on foreclosed and distressed properties, buying them on the cheap and turning them into rental properties. But as foreclosures have dried up in many markets and competition has increased, some investment companies are turning to flipping more expensive properties, particularly in California, where limited inventories are available.
 
“Unlike the flippers of the housing bubble, who bought homes with little or no money down, those investors today often have to make all-cash purchases, which has reduced the pool of potential buyers,” The Wall Street Journal reports.
 
For example, American Coastal Properties LLC is buying up properties with what it considers “lot value”: homes with no curb appeal but that are located in exclusive neighborhoods in Southern California. ACP is spending between 50 percent to 100 percent of the purchase price in redesigning — and, in some cases, rebuilding — the homes, says ACP owner Nick Sinatra.
 
“It’s a land trade,” Sinatra says. “We’re essentially higher-end home builders in highly desirable neighborhoods that, even in bad times, don’t suffer.”
 
After ACP bought a Venice, Calif., home last year for $900,000, the company sold it in June for $2.065 million. It had spent nearly $600,000 on renovations. Sinatra told the Journal that he believes flipping luxury homes offers better returns because the market for turning less-expensive homes into rentals or flips has grown “overcrowded.”

“There are fewer competitors in this space because it’s more difficult,” he says.

 
 
Source: Realtor Mag