Brzeski says two main factors combined to send him upmarket in the projects he lends on.
Newly flush Wall Street investors moved into the mid-market with so much money that they bought nearly every foreclosure in sight, mostly to rent. The Blackstone Group, for example, spent $5.5 billion on 32,000 homes across America, according to the firm. American Homes 4 Rent, the California-based real estate investment trust founded by self-storage billionaire Wayne Hughes, spent $3.3 billion, on more than 19,000 houses.
"These Wall Street guys employed huge dollars," Brzeski said. "These firms came to the courthouse steps and bought everything in sight. So the low- to mid-market dried up."
Brzeski said he had originally been wary of the high-end market, because of the much bigger sums involved and thus greater risk. But then in 2011 he financed the purchase of a house in West Hollywood for $1.425 million. Another $1.175 million was spent on a total refurbishment.
"When the developer put it on the market, they had multiple, all-cash offers," he said. "There was a line out the door to buy it. It sold for $3.5 million. This was an incredibly profitable project. This really opened my eyes."
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The house was bought by actress Sarah Gilbert, who became famous on the television sitcom "Roseanne."
Daren Blomquist, RealtyTrac's vice president, said: "Flippers are getting more confident that the market is really recovering, and therefore are more willing to go high-end, even though it's more risky."
Blomquist said with the stock market doing so well, there is a lot of investor cash out there, and a huge amount of wealth and pent-up demand at the high-end of the market. When a beautifully refurbished mansion hits the market, they are snapped up, often with all-cash offers, he said.
Foreign investors are also spending billions on the U.S. property market. Last year, Chinese investors spent $12 billion on U.S. real estate, making the country the second-biggest foreign investor, just behind Canada, according to the National Association of Realtors.
Blomquist also sounded a warning for anyone who thinks flipping is easy. Many who try, suffer catastrophic losses.
"It's 10 times as risky doing high-end flips. Unfortunately what happens a lot of times, flippers have a property, then they can't find a buyer to purchase it."
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Brzeski's business model is simple. Using a fund of investor money he lends 75 percent of a project's "hard costs" - that is money used for the purchase and refurbishment - and collects interest at an annual rate of approximately 10 percent.
Usually the loan is repaid within six to 12 months. He does not share in the profit made by the flip. Brzeski loans between $1 million and $4 million on each project.
Another factor, unique to California, helps him fund luxury flips, said Brzeski. Because of a 1978 voter initiative law knows as Proposition 13, the tax assessments of California houses have increased dramatically less than home values since the law was enacted, as long as the home has remained unsold.
Now, owners who had been reluctant to part with their large homes since the early 1970s because of "Prop 13" are dying, or are finally ready to downsize.
"Almost all our homes in these A and A-plus neighborhoods have something in common. You look at the appliances in the kitchen. If they are from the 1960s or 1970s, that's the house to flip," Brzeski said.
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Across the country, close to Washington, D.C., Chris Haddon works for Hard Money Bankers. They provide money for investment deals on "fix and flip" projects in Washington, Maryland and Virginia.
Haddon says he, too, has seen a surge in deals involving high-end properties.
"A few years ago, you would look at a $2 million property and have no idea how long it would take to sell. The high-end market is always the last to rebound. But it's now rebounded and D.C. is hot."
In Miami, Mark Black, a realtor, said people with cash have been moving into the high end of the market in the past year.
"The market has gone through the roof. You see people buying properties one
year ago and selling them at 20, 30 percent profit. Some of these are no more than paint jobs. The ones that are doing big rehabs are making huge profits."
In Manhattan, Tim Desmond, a realtor with luxury realtors Stribling, said high-end flips in New York are not for the faint of heart, but the profits can be huge.
He cited a 12,000-square-foot (1,115-square-meter) home on Manhattan's East 56th Street that was bought by an investment group for $10 million. It took two years to convert it into two, three-story, 6,000-square-foot (557-square-meter) condominiums. The first is now on the market with a $17 million price tag.