He Won the $2 Billion Powerball. Now He’s Buying Up Lots Burned in the L.A. Fires.

Rebecca Picciotto and Konrad Putzier | Photographs by Stella Kalinina for WSJ

ALTADENA, Calif.—On a recent overcast morning, a group of investors surveyed one of their newly purchased, wildfire-scorched land plots, when a silver-haired woman approached.

“Who are all of you?” asked the woman, the resident across the street. “This is Edwin,” said one of them, nodding toward a stocky, ponytailed man in the group.

The 33-year-old has spent $10 million to buy up 15 lots. He’s one of the biggest in a wave of investors snapping up scorched L.A.-area properties, often from displaced residents who have opted to cash out rather than endure a multiyear rebuild. Many are from farther away: There’s a San Diego developer and an Arizona fund. A Los Angeles-area hospice executive has also made post-fire purchases.

The purchases have raised alarm in Altadena, an unincorporated community northeast of downtown L.A. that had about 42,000 residents before the fires. Residents are afraid they’ll lose the small-town feel created by the Craftsman bungalows and Spanish Revival homes that once dotted the streets. 

A petition to block investors from buying Altadena lots has collected almost 1,500 signatures. The local resident group behind it calls the influx of investors a “second wave of disaster,” after the fire. Fueling the anxiety: a raft of recent California laws and bills that make it easier to build duplexes and apartment buildings in single-family neighborhoods like Altadena.

Most developer plans so far appear to be single-family homes, but some bigger, multifamily buildings have been pitched. 

“People have to realize that’s what we’re battling against,” said Shawna Dawson Beer, who runs an online community that reaches roughly 20,000 of her Altadena neighbors. “It’s the development question, the densification question, the gentrification question.”

Altadena alone lost some 9,000 structures. Nine months later, it’s healing slowly. Debris and ash have been cleared, but tree-lined streets have been replaced by miles of dirt lots. Residents are stockpiling their cut-down trees at a hiking trailhead nearby. Construction is under way on some new homes, but streets remain unusually quiet at night, when coyotes come out to roam.

Castro says his rebuilding efforts aren’t charity. He’s mostly planning single-family homes he wants to sell at market value. “The profit margin doesn’t need to be egregious,” he said. “But I’m not building these homes just to give them away.”

He said he wants to sell exclusively to families who want to settle down in Altadena, rather than people who might turn the homes into rentals. And he might settle there, too: He wants to build a home on two cleared lots he envisions packed with whimsical elements like secret underground rooms. He described it as Willy Wonka-esque.

“I want to have kids like yesterday,” said Castro, who isn’t married. “It’s about family. Family is important.” 

Castro, whose father worked in construction, remembers his dad bragging to him and his brother about the projects he worked on, such as the Getty Museum: “He’d be like, ‘I built that building. I worked on that. I’m working on that.’”

Castro said he sees these Altadena homes as a chance to do the same with his future kids, to show them how he helped bring the neighborhood back. 

“I want it to feel like the old neighborhood,” he said. “Like if you put all those houses pre-fire in a time bubble.” 

Many locals appreciate his goals. “I feel better about him than anybody else because he’s from the area,” said Joel Bryant, a contractor who grew up in Altadena and now lives in nearby Pasadena. 

But he’s drawn skepticism, too. “He’s just another person trying to get some profit,” said Seriina Covarrubias, whose home had severe smoke damage but was still standing after the fires. 

Castro, who is new to real-estate development, has assembled a team to help learn the ropes. He hired a design consultant, Arvin Shirinyans, to draft the architectural plans and deal with bureaucratic headaches like getting permits. Plans for the first two small lots—Craftsman-style three-bedroom homes with an additional residential unit attached—have been submitted to the city for permits, which they expect to secure in the next few months, said Shirinyans. 

They are planning more “wow factors” for the larger lots, though they haven’t decided what those will be, said Jacqueline Dilanchyan, Castro’s high-school friend who now helps run his family office. 

Castro estimates his entire build-out will take 10 years. That timeline is partly because they are beginners and partly a strategy. 

“You don’t want to be the first to finish your homes because everybody else will be doing construction,” Castro said. “If you sell at the end of the timeline, the whole neighborhood will be at value.”

Almost one year post-fire, lots are cleared of ash and sparse patches of grass are sprouting through some of the dirt. But few homes have begun construction.

Residents in Altadena and the Pacific Palisades have mostly settled into temporary housing as they confront a rebuild that could take up to a decade. The ones whose homes were barely touched by the fires have moved back to a neighborless neighborhood. (Another building that managed to escape the fire: the gas station where Castro bought his Powerball ticket.)

Some of the displaced are moving faster than others, with home designs submitted for city approval. Others are still battling with their insurance companies to figure out their rebuilding budget, or waiting for environmental reviews to gauge the contamination of their lots. Some who are rebuilding are working together to share construction crews and order materials in bulk to save on costs.

“I’ve never been in this situation before so it’s been step-by-step, figuring out all the what-ifs,” said Carl Fromm, a 76-year-old retiree who is trying to rebuild his home with his wife, Eva. 

Castro, one of two kids, was born into a middle-class Altadena family. The family spent weekends going on fishing trips, fixing up old cars or hanging out with other families in the area. Edwin was a Boy Scout and a Pokémon devotee. He would, and still does, spend long nights with friends playing Dungeons & Dragons.

“It was a very fairytale-esque childhood,” Castro said. 

He left Altadena for neighboring La Crescenta in third grade, when he transferred schools and got extra help with his reading disabilities. But he kept in touch with fellow Boy Scouts in the neighborhood.  

After college, he ended up back in Altadena, leasing a room from a local family after bouncing around rentals in other towns. 

“Times were hard, money was tight,” Castro said. 

He was working out of that Altadena rental as a private architecture consultant when he struck the record-setting jackpot and took home a lump sum of $768 million. At first, he told no one but a close friend, though clues later emerged. He started collecting flashy vintage Porsches and Volkswagens, and bought multimillion-dollar homes, including a Hollywood Hills mansion and a waterfront property in Malibu, which burned in January. He began dating a social-media influencer. 

He also stayed close to his local roots. He bought his parents a $4 million home in Altadena, which had to be remediated for smoke damage after the fires. Friends from Crescenta Valley High School now run his family office and manage his Powerball winnings. He still plays videogame marathons with a fellow former Boy Scout, Demitri Camperos, whose parents lost the Altadena home where he grew up in the fires.  

Altadena used to be an oasis of affordability, but over the past two decades home values have surged, pricing out many residents. Even after a post-fire decline, the average Altadena home value is currently about $1.15 million, according to Zillow, roughly a third the value of average homes in the mostly tonier Palisades. 

Some residents fear the rebuild will erode Altadena’s racially mixed makeup. In the mid-20th century, the community was a refuge for Black homeowners who were excluded from other areas by redlining. That turned it into an anchor for Black economic mobility as families built wealth through homeownership. 

Black residents now make up roughly 18% of Altadena’s overall population, more than double the rate of both the Los Angeles metro area and the state of California. Still, the local Black population has been shrinking for decades amid rising rents and home prices. Some locals worry the fire will accelerate the decline. 

“The fear is that Black homeownership will drop,” said Zaire Calvin, who is Black and was raised in Altadena. “People who have owned their homes for generations—to take that away is beyond fear. It’s panic.” 

Calvin’s mother was living with his sister, nephew and two sons in the Altadena home she bought in the 1960s for $27,500. By the start of this year, it was worth $1.5 million. Calvin had moved into the house next door with his wife and daughter and rebuilt it into a $2.2 million dream home with an Olympic-sized pool. Both homes burned down in January.

Calvin’s sister, Evelyn McClendon, died in the fire after she was separated from the rest of the family in the scramble of the January evacuations. She was 59. 

While Calvin figures out how to rebuild again, his mother is living at a nursing home. He is renting in Glendale.

Calvin, who has been advocating against predatory disaster investors, said he sees Castro as a potential partner for the community. “Billionaires should be the first ones in line to help,” he said. “A collaboration with him would be great to make sure that actually happens.” 

Castro has been trying to earn the community’s trust. His team has been reaching out to local nonprofits like the Altadena Earthseed Community Land Trust and the Greenline Housing Foundation. This kind of effort has been unique, according to Greenline Chief Executive Jasmin Shupper. 

Castro’s team met with the ArtCenter College of Design in Pasadena to discuss potential architectural designs for his lots.

It’s been a buyer’s market, with prices driven down by a flood of available property that require expensive redevelopment, said Teresa Fuller, a local real-estate agent. The median property sales price in Altadena was $600,000 in August, down almost 20% from February, according to real-estate data company Attom. Fuller said most lots are selling to investors and developers. 

San Diego-based home builder New Pointe Communities has purchased 13 Altadena lots and is in contract for two more. The company also plans to build single-family homes, said president Scot Sandstrom. Construction is under way at eight lots, and the company hopes to finish all 15 by next June.

At first, Sandstrom was concerned about opposition from locals, but he said the reception has been friendly. He thinks signs on the lots showing renderings of the future homes helps. 

Fuller said most investors she’s talked to are similarly planning single-family homes. Still, the recent California legal changes make it easier to go bigger, and there is some interest. Many economists and housing advocates argue that California needs to add density to single-family neighborhoods to fix the state’s crippling housing shortage.

Alex Agazaryan, a Burbank-based hospice CEO, has bought four burned-down lots in Altadena. He plans to build single-family rental homes on two of them—each with an additional residential unit—and an apartment development with at least 10 units covering the other two.

“I think this creates an opportunity for builders to build a whole new community,” Agazaryan said, calling it “Altadena 2.0.” He said he believes his apartment project will fit in with the surroundings.

Some opposition has eased since immediately after the fires. Yard signs that read “Altadena Not For Sale,” which popped up soon after the fires cooled, still stand defiantly on some dirt-covered lawns. But so, too, do signs that read “for sale” or “in escrow.”

“People are softening their language to make it clear that they support their neighbors” who choose to sell, said Emily Viglietta, who is currently working on designs to rebuild the home she lost in the fire. “No judgment, no shame if you need to sell your lot.” 

Castro says he has no plans to buy more lots in Altadena. To him, this is a passion project and 15 is enough of a lift.

“It’s too much work,” he said. “Imagine a 10-year project. That’s a good chunk of your life.”

Write to Konrad Putzier at konrad.putzier@wsj.com and Rebecca Picciotto at Rebecca.Picciotto@wsj.com