For some, Kanye West’s former house in Malibu looks like a bunker on the beach after the rapper stripped the cement structure of finishes, plumbing and electrical wires.
But Belwood Investments owner Steven “Bo” Belmont — whose firm finagled a steal, paying $21 million for 24844 Malibu Road — sees only upside: the sand and beach are still steps away and the foundation remains of the Tadao Ando-designed home.
Now, it’s just a matter of restoring the 4,000-square-foot house with help from Marmol Radziner, a design firm involved with the home’s original construction in 2013 for financier Richard Sachs.
Malibu Road, bought at a 60 percent discount from its January listing price, represents Belwood’s largest single-family residential project to date. It’s also the buzziest by virtue of the home’s former owner and the treatment of the property by West, who now calls himself Ye. (See accompanying photo slideshow from a walk-through of the property.)
The high-profile transaction also brings to light the unusual business model Belwood uses to grow its investment portfolio. At its simplest, the company is a real estate flipper using a fractionalized investing model on its mostly residential and some commercial fix-up projects.
Where it gets interesting is the app platform Belwood uses to pool investors. These investors typically account for 20 percent of a property’s acquisition financing. Belwood comes in with the remaining 80 percent, working with its stable of lenders. In the case of Malibu, it arranged financing with CV3 Financial Services, an El Segundo-based provider of bridge, rental and construction loans. Homes are rehabbed or restored and then resold, with the profit split between Belwood and the investors.
With Ye’s former home, a total of 500 investors hopped on board to loan anywhere from $1,000 to $1 million.
It’s technically not crowdfunding, Belmont explained, with individual investors acting as private lenders on a property. In return, those individuals are trustees until the real estate is sold.
The investors, to a certain extent, are part of the decision-making process on property work. Currently, they can leave comments about a project through the app. A new version expected to soon launch will add voting capabilities on certain finishes, such as painting the walls White Sand versus, say, White Linen, Belmont explained.
“It’s still a white wall, but it gives them the opportunity to help decide,” he said. “It’s the same with the concrete, same for the roof and same for the front door.”
In the case of Malibu, Belwood Investments expects to shell out $6 million to $8 million on an estimated 12- to 16-month renovation project.
What works
Malibu is the latest of Belwood’s expanding Los Angeles market buys.
The firm’s local under-construction portfolio includes the late singer-songwriter Bill Withers’ home at 1614 Viewmont Drive in the Hollywood Hills, plus two other Viewmont Drive properties. There are also homes at 1925 and 1855 Loma Vista Drive in Beverly Hills. Belwood also has 2201 Sunset Plaza Drive in the Hollywood Hills and 7610 Woodrow Wilson Drive near Laurel Canyon.
Belmont said he isn’t set on one price point over another: “I buy properties that are $30 million. I buy properties that are $30,000.”
Coastal California, Florida and New York are all markets Belmont considers sustainable domestically.
“I don’t go to Wyoming. I don’t follow the shiny objects. That’s not my thing because those [markets] are the most heavily impacted when the market shifts,” he noted.
While ensuring a property has good foundational elements that can lead to a quick sale, Belwood also looks for homes that are rentable as a safety net in the event of a market turn.
The strategy has largely remained intact since Belwood’s start.
Belmont, who originally began as a mortgage broker in the early 2000s, saw his mentors successfully flip homes during the subprime mortgage meltdown. He bought his first property in Antelope, north of Sacramento at 3052 Scotland Drive for $175,000. He handled all the work to educate himself on the process and pricing. He sold it for $350,000 three months later.
He flipped another two homes on his own before friends took note. They liked the idea of flipping but didn’t want to do it full-time or put their retirement savings on the line. Belmont offered to handle half the purchase price, while his friends came up with the other half and they split the profits.
That process later opened up beyond Belmont’s friends in what officially became Belwood, utilizing the app to keep investors informed of projects’ progress.
“I designed it to be the anti-BlackRock or the anti-Blackstone,” Belmont said. “This was designed to create a financial impact not only to the local investor but to the community.”
Eyeing DTLA office
The company, which has corporate offices in Folsom, more recently opened a Newport Beach location and is now working on an Athens, Greece outpost.
The overseas strategy eyes properties in tourist areas as short-term rentals. The goal, unlike domestically, isn’t to venture into suburban areas, Belmont said.
Farther out, the 80/20 split in funding acquisitions is likely to shift. Belmont projected the firm will eventually move to cover 90 percent of a deal.
In the commercial space, Belwood expects next week to complete work on a golf course, set to be called Belmont Pines Golf Course north of Santa Rosa. There’s also an RV park and a Calistoga motel.
Belmont said flex space that can lead to conversions, or a mix of uses, are the focus near term.
He acknowledged the more he delves into commercial, the greater the complexities are in working with state and local governments. Still, he said he’s sitting on the sidelines, eyeing Downtown Los Angeles’ challenged office market in particular.
“I’ve had my eyes on the big, tall buildings with the graffiti all over them,” Belmont said without naming Oceanwide Plaza. “I would love to take that on. That’s kind of a lofty goal.”
Read more
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