Flipping Apartments and Making Millions Off Ocean Beach

by on April 21, 2015 · 25 comments

in Economy, History, Ocean Beach

OB Santa Monica 5041 +

Google Maps photo taken in April 2014.

Somebody’s got to do it, right? Somebody’s got to come in to OB and flip some apartments and make some millions. Right?

That’s exactly what the owners of the 22-unit apartment complex at 5041-43 Santa Monica Avenue believe. They came in about 2 years ago, bought them for $4.75 million, did some improvements ( a lot they claim) and have now turned around and are trying to sell the place for $7.6 million.

That’s almost $3 million. In 2 years – not bad. Of course, they spent a bunch in the improvements. We reported on the original sale back in September 2013. Here’s what we said then:

More recently announced was the sale of a the 22-unit apartment complex the Keen Family Trust had owned, located at 5041 – 5043 Santa Monica Avenue. The large site was purchased by Santa Monica Avenue Manager LLC, for $4.75 million.  Marcus & Millichap Investment Services was the brokerage company representing the seller, – which again was U.S. Bank N.A., successor trustee of the Keen Family Trust.

Here are the improvements they now claim to the 14 one-bedroom apartments and 8 two-bedrooms:

Playa was comprehensively renovated at the end of 2014, with as-new apartment interiors, a significantly updated and upgraded building exterior, new and improved building systems and a beautiful, inviting courtyard.

The interior features include refinished oak floors on the second floor with wood-look first floors, stainless steel appliances, new kitchen and bath cabinets, Silestone quartz countertops, matching tile bath floors and floor to ceiling tub surrounds, all new plumbing and electrical fixtures, ceiling fans and heating systems.

A new courtyard, complete with lounge seating, BBQ area, secure courtyard privacy gate and xeriscape landscaping. Elevations include dramatic new wood panel accents, a contemporary sign package and dual-pane vinyl windows.

For comparison, here’s what the listing stated 2 years ago:

 It consists of eight, two-bedroom/one-baths and 14, one-bedroom/one-baths on a total of 17,498 square feet of land. There are 10 off-street parking spaces in the back, nine-along the side, and one-single garage.

According to the property manager, all the interiors have been upgraded with new cabinets and formica countertops and there are newer windows. Other attributes include a nice courtyard setting, on-site laundry room, secured gating and a slightly pitched roof. 

 We’ll see what happens, whether the current owners get their asking price, whether it sits on the market for months and months, or is swept up by another wheeler-dealer and apartment flipper. It’s all the rest of us peons can do, isn’t it but watch?

hat tips to deb g and dave r.

{ 25 comments… read them below or add one }

Rogue Five April 21, 2015 at 2:12 pm

They’re expecting $2,395 for a 2 bedroom/1bath. And OB sinks further into the sand with overpriced housing.

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Geeta April 21, 2015 at 3:30 pm

Don’t say we’re sinking further in the sand.
Aren’t there some sorts of rules that can be applied, breaks that can be put on, this practice of “flipping”?
What if any regulatory authority can slow this terrible practice down, so that we, the citizens of OB, can still live in our community?

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david millette April 22, 2015 at 11:28 am

to bad for you get a better job then McDs

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Rogue Five April 22, 2015 at 4:07 pm

Says the crybaby who sells trinkets and junk bracelets at the beach. Get a permit, scofflaw

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objamie April 22, 2015 at 9:48 pm

You cannot vend in OB at the wall or around it, legal permit or not.

You will be forcible removed by the police. This is the reality of OB now, today.

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Noob April 21, 2015 at 4:17 pm

That’s $345,000 per unit a half block to the ocean. High, but not impossible.

Another way to look at it is that they want $507 per square foot. That’s reasonable for a house west of sunset cliffs, but on the extreme high side for an apartment complex.

Most of the 2-bedrooms are not $2350 in the complex. One of them has an ocean view, the other one is an end unit and probably 900sf. With a recent renovation and half a block to the ocean, that seems an OK deal compared to what a comparable place in someplace like Mission Valley or UTC would cost. They’d be about the same price but have a 2nd bathroom.

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Mari April 21, 2015 at 4:43 pm

No, there aren’t any breaks for flipping and that’s perfectly fine with me. How is it a terrible practice? If you don’t like the high rental prices in the beach area then move or buy your own home.

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obecean April 21, 2015 at 5:07 pm

No these out of town speculators need to go away as do you!

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obracer April 21, 2015 at 8:33 pm

Dear Obecean ,Locals are also buying rentals and making a ton of money.
It’s called capitalism, if you can’t afford the area, good bye ! get on Hwy 8 , head east, exit at El Cajon Blvd, look for a for rent sign.

Vince Adame aka obracer

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OB1 April 23, 2015 at 10:46 am

I work hard and cannot afford to buy in OB. I am not interested in living in El Cajon as I grew up at the beach. I do not have rich parents who will loan me money to buy a house/condo. I believe real estate in OB is a total rip off and rents are getting out of hand as a result. OB is losing its soul to speculating money grubbers and the charming beach town atmosphere is slowly slipping away at an increasing rate in the form of million dollar condos and business complex monstrosities So we all are losing, obracer.

Somewhere it is is written in blood that renters cover the mortgage. This is becoming more evident– rising rents w no repairs.

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david millette April 22, 2015 at 11:29 am

wwwwwwwaaahhh

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obecean April 24, 2015 at 3:23 pm

“waaaaahhhhhh” says the crybaby who thinks only he should be allowed to sell worthless junk on seawall.

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Christo April 21, 2015 at 4:46 pm

Greeta you crack me up.

Why should there be a regulatory agency for YOU to live here if you can’t put up the $$$?

Entitlement at it’s finest.

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Jason April 22, 2015 at 10:36 am

A private party spent their own money (as opposed to our tax dollars being at risk), paid local workers to do the upgrades and if they make a profit on the sale our city tax coffers will reap the benefits of a higher base property value for years to come.

No additional units were added so traffic and parking were not negatively impacted. The increased value based on the new sale price will elevate the property values of surrounding properties.

What exactly is the concern again?

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Frank Gormlie Frank Gormlie April 22, 2015 at 12:06 pm

We’re simply high-lighting class divisions here. The elite class gets to come in, spend some bucks, hire locals, and instead of becoming responsible, accessible, community-minded landlords genuinely into improving the community – as opposed to simply improving the size of their wallet – the made their improvements and are now trying to flip the huge complex and make a few million. In 2 years. The problem here is speculation by the elite trumps the village again.

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Tyler April 22, 2015 at 12:58 pm

I’m with you, Jason.

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objamie April 22, 2015 at 9:50 pm

You are implying the construction workers lived locally? That is interesting.

My only personal concern is the sterile yuppie scum that are taking over OB will be the primary new renters/owners due to newer, higher cost.

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SW April 22, 2015 at 11:02 am

Why would you complain about others making money? Why not just go make some yourself? I moved here 12 years ago with less than $1000 to my name – I worked hard and I now own a 4-plex in 92107. I’ll definitely be selling it at a considerable profit. It’s what motivated people do (work hard and make their life better). No one has the “right” to live in OB. If you don’t like the prices, GTFO because there’s no shortage of people that want to move here. I find it funny that the same people that complain about rents increasing fight against additional units being built in OB. You can’t have both! If you’re restricting the number of units and there’s additional demand, the current units will sky rocket in price. Simple supply and demand.

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Frank Gormlie Frank Gormlie April 22, 2015 at 12:10 pm

SW – Do you really think that if you just simply “work hard” that you too someday will have millions to flip apartments with? Our “complain”ing is a signal of class resentment. Once again, members of the elite class come in, and instead of becoming responsible, accessible, community-minded landlords genuinely into improving the community – the made their improvements and are now trying to flip the huge complex in only 2 years and make a few million. This is an act most of us peons don’t get to make. We’re watching pure speculation here by the elite, something that we think the villagers ought to know about.

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Christo April 22, 2015 at 1:17 pm

They considerably improved the building while they owned it. How is that “speculation”?

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Frank Gormlie Frank Gormlie April 22, 2015 at 4:32 pm

It is the very definition of speculation.

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SW April 22, 2015 at 5:32 pm

Why do you feel it’s your “right” to live in OB if you can’t afford it? Do you also have the right to live in Manhattan or Beverly Hills? Move to an area that’s affordable, and make a great life for yourself there! Getting upset because a company is buying a building, improving it, and making money off of the transaction is point less in my opinion.

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Christo April 22, 2015 at 10:08 pm

I stand corrected. I thought speculation was to purchase it, but not do anything with it.

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rick callejon April 22, 2015 at 5:57 pm

Those who serve mammon ought to speculate elsewhere.

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Marc Snelling Marc Snelling April 23, 2015 at 1:40 pm

Part of the reason people want to live in OB is because of the community, the people, the historical significance. These are things that begin to change when you nearly double the rent or property value in a neighborhood over two years. These kind of price increases are not sustainable and can only contribute to homelessness. When someone with more money comes in and takes an OB place, someone else moves to El Cajon, and that person in El Cajon gets displaced somewhere. El Centro?

When property values go up the pressure on single family home owners increases as their tax assessment goes up. In turn the pressure to sell to a developer who can turn that single family home into a multi-unit condo increases.

In the end a few will be much richer and most everyone else will be poorer.

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