The house at 2523 Martin Luther King Jr. Way has all the trappings of a profitable West Oakland flip. The paint is a neutral warm gray with clean white trim. The yard is black mulch, dotted with a variety of tiny, lush, non-native plants, and the fence is horizontal slatted wood, in the gentrifence tradition. Inside, the lighting is recessed, the bathroom tile is subway, and the walls are mostly nonexistent.

"Modern, open floor plan with charming colors," the Zillow listing ad claims. "A lot of the work was done with permits."

Another listing: "New dining room, new living room, new kitchen, new bedrooms, new bathrooms. New windows, new roof."

But in one of the hottest real estate markets in the country, in a neighborhood where homes sell for more than 10 percent above list on average—and fast—2523 has sat empty on the market for months.

"If I didn’t know that house so well I’d feel sorry for it," says Gabe Santos, who lived for five years at 2523. "I’d be like, ‘poor little house, no one wants you’."

Of course, someone did want 2523, and the profits from flipping what was once a dilapidated, graffiti-covered squat, foreclosed after its owner was convicted of mortgage fraud and money laundering. There’s no trace of the little house’s former life, except for a characteristic that does not make the listing: The house is leaning, pitched several degrees sideways, and not in an endearing way.

It’s difficult to plot the precise center of Bay Area gentrification, but West Oakland—or "WeOak," as some have speculatively tried to rename it—would be a strong contender.

A city that once suffered for catastrophic disinvestment is now plagued by a tidal wave of aggressive reinvestment. And with its proximity to San Francisco and mass transit, and its beautiful historic housing stock, this part of Oakland has seen some of the most dramatic changes, and a recent influx of new money from more affluent arrivals. Even the district’s council member was implicated in a shady local house flipping scheme.

But for all these most recent changes, West Oakland has been at the vanguard of the city’s accelerating demographic shifts for the last two decades. It was home to art galleries, maker spaces, punk houses, underground music venues, and other early indicators of gentrification long before Wall Street hedge funds purchased these homes and Google buses rolled through—galleries, spaces, and venues that are now facing their own evictions in turn.

West Oakland is the city’s oldest established neighborhood, a settlement that arose near the waterfront and the railroad terminus as Bay Area urban life began to take shape after the Gold Rush. Over time, it grew into a collection of neighborhoods, with a thriving jazz and business district and rows of sprawling, ornate Victorian and Edwardian homes alongside heavy industry and manufacturing centers that kept the locals employed.

Oakland suffered from white flight and blockbusting in the 1960s, and then from a loss of that manufacturing industry in the 1970s. But while the city became synonymous with California street crime over the next decades, it also became home to a quietly burgeoning arts community. In the 1990s and early 2000s, cheap, beautiful, industrial space in an expensive region attracted a wide, ill-defined range of creators who made everything from electronic music to fire-breathing cars. It was the first step toward a moneyed demographic shift that would be swifter than most anyone might have guessed.

In 2008, this Oakland showed no immediate signs of what was yet to come, just as the last tenants at 2523 were moving in.

Constructed years before its Victorian neighbors, 2523 is comparatively modest, with a tall false facade, like you’d see on an Old West clapboard movie set, instead of plaster medallions and leaded glass. This house was never supposed to be a very nice house—it was originally built in 1897 as a "rooming house … for transients," and it’s still zoned and assessed for this purpose today. In 2008, the four-bedroom, 1,700-square-foot building rented for $1,200 per month to a revolving cast of young men who quickly established it as an integral part of West Oakland’s homemade art scene. Eventually they dubbed it Locos Only.

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"I didn’t move in there thinking, this is an ideal place to throw shows—because it’s not, it’s very far from ideal," says Albert Luera, who moved to 2523 from his family’s home in East Oakland in 2008. "It took those first couple shows to kind of see that, oh yeah, I guess all these people can fit in the living room."

Their predominantly black, impoverished neighborhood in West Oakland changed as so many predominantly black, impoverished urban areas have over the last decade, with DIY cultural hubs for new residents redefining a city’s function and value based primarily on its cheap rent.

In the early days, Luera and Santos say neighbors invited them to barbecues and never complained about the noise, which was always over before midnight. They paid rent to a property manager, Big Ed, who lived next door and made repairs as needed.

"It was very respectful—everyone was cool with each other," says Santos. "It was just kids who wanted to listen to music."

But 2523 was more than a home, or an underground music venue, or an unwitting tool of gentrification in a city on the brink of massive demographic change—it was also a piece of a multi-million-dollar mortgage scam.

Luera and Santos never met their landlord Jim McConville, who purchased 2523 in 2003 under the guise of his Sapphire Park Home Corporation. But McConville, who called himself "the West Coast Donald Trump" and is currently serving a nearly eight-year prison sentence for fraud and money laundering, was not a typical Oakland landlord.

In living room presentations to eager potential investors across California, McConville convinced dozens of straw buyers that he would pay them $10,000 each if they took out large mortgages on properties he said were undervalued in 2008, as the housing market was beginning to deflate. Instead, he kept the difference between the bank loan and the true home value, netting him and his accomplices millions while allowing the mortgages to default.

The public records on 2523 suggest McConville ran the same scam there years prior: In February 2003, he bought the home for $300,000 through one of his companies, the Sapphire Park Home Corporation; in October, he sold it for $430,000 to a John Wilson; one week later, Sapphire Park bought it back for $385,000. In 2005, McConville transferred ownership to his daughter, Nicole. After McConville’s arrest in 2009, Sapphire Park was shut down by the state along with his other shell companies, his daughter filed for bankruptcy, and 2523 became the latest in a fast-growing stockpile of Oakland properties facing foreclosure due to fraud, predatory lending, and a newly brutalized economy—a pile that in turn created a host of new opportunities for eager investors.

But as thousands of people were displaced from their homes through foreclosure, those houses did not in turn present new opportunities for other residents to become homeowners, even though they were suddenly cheap. Between 2007 and 2011, more than 10,000 Oakland homes were foreclosed, and 42 percent of those homes were purchased by investors.

While 2523 lingered in legal limbo, the houses around it were switching hands at a rapid clip, but research by the Urban Strategies Council and Greenlining Institute revealed a massive disparity between available mortgages for white buyers in Oakland versus people of color, who make up more than half the city population.

"What was alarming was the low numbers of mortgages particularly of people of color, but also just generally," says Bobby Stahl, Housing and Economic Development Program Coordinator at Urban Strategies. "There is a belief that some of this limited opportunity for homeownership might be limited by speculative activity, all cash purchases"—which lock out small buyers.

Meanwhile, foreclosures that were already rented out left tenants in a new, precarious kind of housing purgatory.

When the news about their landlord’s crimes reached 2523, there was some debate about how to proceed.

"We got a note on the door, like, ‘this is the bank’s house!’ But we thought, this’ll just figure itself out. All these things were just happening around us, and we had no control," says Luera. "It’s like when a cartoon character runs off a cliff and they keep running until they actually remember gravity and look down—that’s kind of how I felt about discovering how shady the ownership was. Like, wait, we’re on borrowed time."

For a while, life continued as normal. "We kept paying for a little bit, because rent was so cheap," says Luera. "I just felt like, I’m paying rent to somebody to let me live here and I don’t really want to ask any questions. I’m gonna have to do this anywhere I live—does it really matter that it isn’t going to who I think it’s going to?"

But ultimately the temptation to simply stop paying was too strong. "There was no scam on our part, it wasn’t like, ‘hey let’s squat this place’," says Luera. "At a certain point we stopped paying rent because it was like, this is going to be taken away from us at some point anyway."

They kept the utilities on, but with no rent came no sense of responsibility for the house. While banks were facing new regulations and fines for blighting Oakland neighborhoods with empty foreclosures, it was the tenants that let 2523 fall apart.

"Once we started squatting, that’s when the darkness happened. There was no one to fix anything anymore and we were a bunch of dumbasses—it went downhill real fast," says Santos. "It turned into kids just trying to party and do drugs and drink, spray painting the walls and just general nastiness. It was infested with rats and everyone was doing heroin—it wasn’t so much about music anymore."

The lean got worse, and more symbolic: As the homes around it were foreclosed and flipped, and Oakland became one of the hottest real estate markets in the country, 2523 couldn’t even stand up straight.

The definition of a flip for research purposes is simply a home that was sold twice in a 12-month period. While some flip markets are still thriving, most have cooled in recent years. "We think a majority of flips today are ‘good’ flips in the sense that investors are improving homes that were in need of rehabilitation," says Trulia Chief Economist Ralph McLaughlin. "This is in contrast to the likely fact that a larger share of homes flipped 10 years ago were ‘bad,’ or speculative flips, where investors were buying and selling homes because they were speculating on pure price appreciation."

Urban Strategies and other housing researchers differentiate between flipping and rehabilitation. "There’s a tremendous amount of overlap in the two and they’re not mutually exclusive—most folks engaging in rehab activity are flipping, but not all flippers are going to the trouble of rehabbing a property," says Stahl. "In this current market it may be beneficial for someone to acquire a property and just hold on to it for six months."

Home renovation is presupposed to be a productive thing, but the purchasing, changing, and reselling of a home at a higher price is no indication that the home has actually been improved. The most successful house flipping complicates the notion of a house’s value: Does $1,000 worth of glossy white subway tile actually add $10,000 of value, or does it attract the kind of person who likes glossy white subway tile, who is statistically more likely to have $10,000 more to spend on a house? Is flipping the practice of rehabbing old homes, or a more elaborate form of staging meant to appeal to a particular kind of buyer?

Brian Burke has flipped more than 700 homes as the CEO of real estate investment firm Praxis Capital. "The important thing for an operator that’s looking to fix up houses is finding ones with the right things wrong—if you can paint, install new carpet, modernize the flow, you’ll get paid for those things," says Burke. "When you buy a house that’s leaning and your intent is to do a lipstick job by just correcting the easy things, but not fixing the structural issues, it can be challenging because now you’ve made the house look nice, but the buyers look at it and think, ‘Jeez, at some point I’m gonna have to fix that,’ and half the work to make the house look nice will have to get redone."

Now, as one of the most expensive housing markets in the country, Oakland presents far fewer opportunities for investors looking to make a quick or even a medium-term buck. Flipping houses in the Bay Area still yields the highest profits in the country, according to RealtyTrac, but the deals are decidedly less attractive when one considers the growing cost of investment and shrinking margins. It makes the business of house flipping increasingly prohibitive to small operators.

"We think that flipping in the Bay Area will stabilize or even decrease over the coming years, even though profits are higher than other markets," says McLaughlin.

"This is the time when amateur house investors and first-timers are itching to get started because of the excitement around the escalating real estate values and the proliferation of house flipping shows on television—everyone wants a piece of the action," says Burke. "That euphoria causes everyone to kind of jump in, but they’re jumping into an empty pool."

Since Urban Strategies published its report on the influx of investors to Oakland’s housing market, the money has changed hands. "The big investors of that time were not the common Wall Street hedge funds," says King. "And that has certainly shifted—there’s been an influx of that institutional capital into Oakland since we finished."

King, Stahl, and other housing researchers in Oakland are able to know where this new housing money is coming from because of new restrictions on investors passed after the foreclosure crisis—restrictions that are still easily avoided by motivated buyers.

Luera moved out of 2523 in 2010 and Santos in 2012, both to other homes in roughly the same neighborhood. 2523 was finally foreclosed in 2014.

"I figured it would just live the life of a trap house, eventually burn down or something," says Santos. "I never thought it would get fixed up and cleaned the way it has."

But Luera was always more skeptical. "I’m actually surprised it took them this long," he says.

In 2015, after nearly a year on the market, 2523 sold for $240,000 to Vestis Holdings VIII, a real estate investment firm registered to Jonathan Owyang and an Oakland post office box. According to public records, Owyang owns 11 different limited liability companies, including Vestis Capital Group, Vestis Management, and Vestis JV, all established between 2010 and 2015. He flipped at least nine homes, including some foreclosures, under the Vestis title in the flatlands of Oakland and nearby San Leandro between 2011 and 2014, purchasing them for $189,000 on average and listing for $383,000. Owyang holds at least six more houses, each under a different Vestis LLC. He lists himself as the "managing member" of Vestis Capital Group on LinkedIn. Owyang did not respond to messages seeking comment for this story.

Running one business under the guise of several LLCs is not an uncommon tactic for house flippers in Oakland or elsewhere. "It could just be literally limiting his liability, keeping each interest separate," says Stahl.

But after weathering the foreclosure storm, Oakland passed an ordinance to prevent this exact practice in the future, requiring investors who flip distressed properties to register with the city and pay a corresponding fee, ostensibly in order to prevent the kind of wide-scale blight that occurred when banks owned entire neighborhoods just a few years ago.

"If he has an LLC for every acquisition, he could potentially avoid having to register the properties," says King. "Once you start accumulating properties like that it gets pretty pricey—and the penalty for not registering is even higher."

But the most curious thing about 2523 is not that it keeps falling into questionable hands. It’s that it’s still leaning.

2523 Martin Luther King Jr. Way has toggled on and off the market since early March due to problems with the gas meter, according to the agent. It’s listed at a comparably fair $599,000 in a neighborhood where, according to Redfin, the median list price is $657,000 and $508 per square foot. In a way it’s hard not to root for 2523, which has the potential to be a relative rarity in the current market: A single-family home owned by a single family who actually lives in it.

But the lean has worsened to the point that 2523’s facade is actually resting against its neighbor to the north. It is listed in the disclosures. So far, this appears to be a dealbreaker.

"They’d have to take the whole house down to fix that," Santos says, laughing.

Otherwise, 2523 bears little resemblance to its old self now, but its history hasn’t been fully erased yet: The former fast food restaurant two houses down that was painted during a Locos party is listed on Google as a neighborhood landmark, a welcome sign.

And for all the well-founded worry about what comes next for the city and its young misfits, its culture creators, its house destroyers, Luera at least still feels hopeful.

"Sometimes people are like, ‘What happened to the house parties in Oakland, where did they go?’ But I think they’re still there," he says with a small smile. "I think we’re just not invited to them anymore."

Editor: Adrian Glick Kudler

Illustrator: Susie Cagle