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Talking Flipping With ReInhabit, the Guys Who Just Sold an Echo Park House For $922k

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Founded four years ago, real estate development firm ReInhabit specializes in fixing up beaten-down properties around Los Angeles (such as this 1907 Craftsman in Echo Park, which just sold for a pretty unbelievable $922,000) using a combination of new and reclaimed materials sourced from sister company LA Salvage. For the Curbed University 2013 spring semester, ReInhabit's owner/founder Rudy Dvorak and creative director John Douglas herewith offer a glimpse into the highly competitive world of flipping.

How do you find your properties--do you attend auctions, or just scour the MLS/Redfin, etc. like everyone else?

Rudy: I used to go to auctions, but I haven't been to any in over a year. I don't bother anymore--it's too competitive. Now I have about six agents keeping an eye out for me, plus we have a guy in our office where basically all he does is sit at the computer looking for listings.

What kind of properties do you look for?

Rudy: Troubled houses, places that are in bad shape, but with good bones and interesting architecture. It's great if they have some original detail that's been preserved or can be saved; for instance, the house on Lemoyne had these beautiful transom windows.
John: Just houses with potential--when you can take a place that's basically flatlined and bring it back to life, that's the fun part of our job.

Do you bump into the guys from Better Shelter, ModOp Design, Extraordinary Real Estate, etc. at open houses often?

Rudy: Oh yeah, all the time. I'll race over to check some place out, then I'll see Steve [Jones of Better Shelter]'s car outside, and my heart will sink. [laughs]

Is there a friendly rivalry between you and those other guys, or are you more like, "Hello, Newman" when your paths cross?

Rudy: Nah, it's friendly. Actually, here's a bit of trivia: Steve and Greg [ed.: Greg Steinberg of ModOp Design] and I all went to the same high school, in Laguna Beach. I have lunch with Steve about once a month, and Greg and I have been talking about doing a deal together.

There's a fair amount of frustration and resentment among regular house-hunters who feel like they're being shut out of the market by flippers. The perception is that you have to come in with an all-cash offer to stand a chance these days.

Rudy: I know, it's a problem. There is so much investor activity now. I'm making all-cash offers, I'm as competitive as anyone, and I get outbid all the time, too. People are making offers with ten-day escrow, five-day escrow, no contingencies.
John: However, the houses that we're going after, ninety-five percent of buyers aren't interested in--they need way too much work.
Rudy: There is an unbelievable amount of drama involved in these projects; it's a total commitment.

What issues will turn you off from bidding on a fixer? What's been the most daunting situation you've contended with?

Rudy: There isn't too much we're afraid of, but I wouldn't want to buy a house that someone committed suicide in. And if a house's foundation is really shot, like it's in danger of sliding down a hill, that's something I would walk away from. Probably the most daunting situation I've had to deal with was when we were working on a property in Mt. Washington that had a lot of large, dead animals in the basement. Decomposing. I think they were dogs.

Got any tips for dealing with the Department of Building and Safety?

John: Instead of going to the department's main office Downtown, I recommend going to their office in Van Nuys or another location. And bring Wite-out: if there's something on your permit that the inspector doesn't like and it's not crucial, you can just white it out, and then they'll be like, "Oh. Okay."
Rudy: Be honest with the inspectors, or you'll end up paying for it down the road--but don't talk any more than you need to.
John: And be really, really patient. [Illustration by Eric Lebofsky]
· Curbed University [Curbed LA]