Housing developers look to drum up investors' interest

A couple of Southern California development companies selling into the low end of the starter-home market in the Reno area look to boost sales through incentives to investors who purchase multiple units.

Developers John Cole and David Billings of San Diego, who are selling the Grove Garden Condominiums at 197 Grove St., offer as much as $2,400 in purchase credits and pre-paid homeowners association fees for two years to investors who buy four or more one-bedroom units.

Pricing for condos in the project starts at $89,900 for a 480-square-foot unit with one parking space.

In Stead, meanwhile, a company put together by Cole and David Pepper, also from San Diego, offers incentives of $2,500 in credits and two years of pre-paid homeowners association dues to investors who buy two units in its High Sierra Ranch Homes project. Investors who buy four units get $6,500 in credits $1,825 per unit plus five years of homeowners' association dues.

Bill Custer, a Keller-Williams Group One Inc. agent who's selling Grove Garden Condominiums, says investors have accounted for about half the sales of the project.

So far, 39 of the 93 units in the complex have been sold.

The complex built in the early 1980s was initially planned as condominiums, but was rented until a recent remodeling project got it ready for sale.

The one-bedroom units that have been purchased by investors all are currently rented, Custer says. He suggests that investors use a rent of $595 when they run the numbers on the purchase of one of the units.

Just as the condos target first-time buyers, Custer expects that some of the investment interest will come from individuals looking to make a small-scale entry into residential investments.

At High Sierra Ranch, meanwhile, Rhonda Cain a limited partner in the project who's overseeing its development says the cooling interest in the residential market from investors may work to the project's advantage.

"We see this as an opportunity," she says. "Two years ago, everything was out of sight. But this is affordable."

A 988-square-foot, two-bedroom floor plan at High Sierra Ranch is priced at $194,000. The project also includes a 1,192-square-foot, three-bedroom option.

The project near the intersection of Lear and Stead boulevards initially served as housing for Stead Air Force Base. Pepper and Cole bought the 128-home property and remodeled it for sale.

(Each building includes two units, but each is a separate parcel.)

Sales formally kicked off about 10 days ago, but Cain says about 20 percent of the first release of 24 units was pre-sold.

"We've sold to quite a few investors, even without the incentives," she says.