Monica Masuda is not a casual real estate flipper.

Using a deliberate buy-and-sell strategy, the former investment banker now owns 600 units in seven properties, after selling 20 apartment buildings over the past five years worth about $50 million.

"I look for undervalued assets, mostly coastal properties," said Masuda, a mother of three whose husband brings home a regular paycheck. "I reposition the apartment buildings, put money in to fix them up, raise the rents and then I sell and buy a larger unit."

But while Masuda is in escrow on three new buildings in Long Beach and Santa Ana, she has been a net seller in Redondo Beach and Hermosa Beach, where prices are sky-high.

Real estate investors like Masuda, who form the backbone of Southern California's frenzied housing market, show tentative signs of getting out or at least lightening up on assets deemed vulnerable to a market drop.

Investors who have witnessed the booms and busts of past cycles are selectively selling investment properties, even as prices continue to rise.

In some cases, they are taking profits by selling properties in Southern California and then reinvesting in Nevada, Arizona and Washington, where prices for homes, apartment buildings and condominiums are lower. Or they are turning to areas with more down-and-out properties, like Long Beach, and selling in pricier markets like Manhattan Beach.

Private equity funds and other long-term value players are churning their portfolios in much the same way as Masuda. They are selling older units and buying newer ones, or moving into outlying areas where price appreciation has been strong but not ridiculous.

"We're probably passing on a lot more deals than we normally would right now because we see bidders outbidding the more rational investment buyers like ourselves," said Jim Rosten, president of Kennedy-Wilson Properties Ltd., a unit of Kennedy Wilson International in Beverly Hills, which operates two real estate funds and manages 55 million square feet of property in 21 markets.

Because there is such a strong demand for housing in Southern California, and so little affordable product, Rosten believes that trouble will come not from a wholesale bursting of a bubble, but from some borrowers who are unable to carry their mortgages when interest rates rise.

"A lot of people are qualifying for gimmicky loans on the margin," he said. "But the economic chemistry of Southern California is still very positive."

'Anti-bubble person'
In Los Angeles, where real estate has turned into a spectator sport, many are adamant that no housing bubble exists. "I'm the biggest anti-bubble person out there," said Robert D'Elia, managing partner of RAD Management LLC, a Santa Monica-based developer who is converting a vacant 37-story downtown office building into condominiums.

For reprint and licensing requests for this article, CLICK HERE.