Edwin Castro is committed to helping his hometown recover from the Eaton fire.
Castro won a $2 billion Powerball lottery in 2022. Since the fire earlier this year, he has been buying up lots in Altadena, California, with the hopes of leading the rebuilding efforts there. He has already spent $10 million on 15 lots, but he’s not the only one looking to buy in the wake of the disaster.
The Wall Street Journal reports that a San Diego developer, an Arizona fund and an Los Angeles-based executive have also been buying lots. (1)
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Castro hopes to sell the homes he builds for fair market value.
“The profit margin doesn’t need to be egregious,” he told the news outlet. “But I’m not building these homes just to give them away.”
However, the WSJ noted that a petition to block investors from buying lots has almost 1,500 signatures. Residents are said to be worried about recent changes to California laws that make it easier to build multifamily apartments in single-family neighborhoods like Altadena. They are also worried about so-called disaster investors who can take advantage of homeowners who find it too expensive to rebuild their homes.
What you need to know to decide whether to sell out or stick to your property after a natural disaster.
Altadena’s former homeowners
The fire in Altadena killed at least 31 people and destroyed about 9,000 structures. For some Altadena residents, rebuilding brings the fear of losing the neighborhood’s character.
“People have to realize that’s what we’re battling against,” resident Shawna Dawson Beer told WSJ. “It’s the development question, the densification question, the gentrification question.”
“I want it to feel like the old neighborhood,” Castro said of his redevelopment plans. “Like if you put all those houses prefire in a time bubble.”
However, not everyone is convinced.
“He’s just another person trying to get some profit,” resident Seriina Covarrubias told WSJ.
Castro’s timeline for the Altadena project is 10 years. Moreover, he conceives of his rebuilding work as a passion project, he told the news outlet, and plans only to develop the 15 lots he has bought.
“It’s too much work,” he said. “Imagine a 10-year project. That’s a good chunk of your life.”
In the meantime, former residents have mostly settled into temporary housing. While some residents were able to move back into their homes, others are reported to be still negotiating with their insurance companies, waiting for environmental reviews of their lots or, if they’re lucky, beginning the reconstruction process.
“I’ve never been in this situation before so it’s been step-by-step, figuring out all the what-ifs,” Carl Fromm, a retiree from Altadena, told WSJ.
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Options for homeowners after a disaster
The what-ifs can be a major stumbling block for anyone trying to rebuild after their home is destroyed.
Filing an insurance claim after a disaster can be a lengthy process, and as the Los Angeles Times reports, many insurers are scaling back their coverage in disaster-prone areas like California.
Once you report the details of your claim, an insurance adjuster will investigate and determine how much the company will pay out. This process can take several months or years, depending on how many others are filing claims, and the complexity of your case.
However, the L.A. Times notes that in California, if your home was completely destroyed in a state of emergency event, the insurance company was required to immediately pay out a minimum 30% of the estimated value of your belongings, that proportion will increase to 60% in 2026 as part of new legislation (3), and at least four months average rent for the area in which you live. You are also allowed to ask your insurer for cash advances for your living expenses.
After your claim is filed, ensure you have a paper trail with detailed notes and dates for when you communicated about your claim. Keep your bills and receipts handy so they can all be claimed. You can also apply for aid from government programs like the Federal Emergency Management Agency (FEMA) and other state-specific or need-specific organizations. (4)
Rebuilding
Once you have an understanding of how you’ll be reimbursed by your insurance company, you can choose to rebuild your home on your lot. Note that a third-party or public adjuster can work on your behalf to ensure you get the full value of your policy, for a fee. (5)
As you choose contracting companies, your insurance provider may share a list of preferred vendors, but you should opt to do your own research as well to ensure you get both the best price and quality work.
You should also understand what type of insurance you have: If you have a replacement cost policy, the insurance company may pay for a rebuild of a comparable home. If you have an actual cash value policy, you’ll receive the current value of your home and its contents, which may be lower than the actual cost of replacement.
Selling your lot
For some homeowners, the cost of rebuilding can be much more than their insurance payout. Others can’t wait for months or years to receive the payout, then wait even longer for a new home to be built. In these instances, cutting losses and selling the lot can be the best choice.
You have the option to sell your land as is, without clearing it of debris — leaving the cleanup to the buyer. However, developers who buy land in this condition may give you a lower offer in consideration of the work they will have to do to make it ready to build on. You may be able to get a higher price if you invest in having the land cleared yourself.
In any case, be sure to do your research and get a number of quotes from redevelopers to ensure you’re getting the best price for the land. Opportunistic developers may try to lock you into a limited-time deal or use other high-pressure sales tactics, but taking your time is crucial in these cases.
You should also know that if you don’t sell but choose to hold onto your vacant lot, you’ll still be on the hook for your property taxes, and any maintenance or liability concerns. You may also still owe payments on your mortgage, even if your property was completely destroyed. However, your insurance company may communicate directly with your lender in order to make mortgage payments.
And, while under most circumstances an insurance claim could mean your rates will increase for up to seven years, a claim from a natural disaster should not affect your rates, by law. If your rates do increase, you should contact your insurance company, and if needed, an attorney who specializes in insurance law.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Wall Street Journal (1); Los Angeles Times (2); New York Times (3); USA.gov (4) Money Management (5)
This article originally appeared on Moneywise.com under the title: $2B lottery winner among investors buying up lots after LA County fire — when selling after a disaster is your best move
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.