The smell of cat urine is so overpowering that it will stick to the shoes of brothers Eric and Gary Raydon even after they leave the beaten-down house a couple of blocks west of Wells near downtown Reno.
But in a few months, the house will be renovated from top to bottom, new landscaping will be in place, and a freshly painted white picket fence will greet some of the growing number of renters looking for homes in Reno's Midtown neighborhood.
Marmot Companies, owned by brothers Eric, Gary and Bryan Raydon, has assembled some $3 million in investor funds during the past two years to buy, rehabilitate and rent a portfolio of 30 residential units both east and west of Virginia Street in Midtown.
And with another $2 million in capital likely to be put into play by Marmot, the company is poised to make a growing number of bets on the resurgence of the neighborhood.
The approach of the Raydon brothers combines conservative financing with a healthy appetite to take risks in neighborhoods that easily could go either way.
They don't rely on leverage, paying cash for each of the 15 properties they've purchased.
They finance renovation which generally is extensive through the cash flow from properties purchased earlier.
And they're not looking for a quick sale.
"We're creating culture, long-term value and striving to uplift neighborhoods," says Eric Raydon. "We're not going to slap some paint on it and call it good."
Marmot Companies is working in neighborhoods where other investors would think twice, and the company is buying houses with big problems.
About half the company's properties are in the bungalow district dubbed "West of Wells." It also targets properties near Virginia Street in Old Southwest, takes a look at properties west of the University of Nevada, Reno, and might consider residential properties near Saint Mary's on the west edge of the downtown core.
In the neighborhood west of Wells, Eric Raydon says the company sees a solid economic base Renown Regional Medical Center, the VA Sierra Nevada Health Care facilities that will draw young professionals who want to live in a gentrifying neighborhood.
"We're focused on neighborhoods that are walkable and bike-able," says Gary Raydon.
Toss in the growing entertainment and retail offerings in the Midtown area, the possibility of improved public transit on Virginia Street and a neighborhood where property prices still are beaten down, and the Raydon brothers see opportunity.
But it's an opportunity that carries a price.
Carpets so soaked with cat urine that it overwhelms as they step in the front door. A closet filled with hypodermic needles after a junkie squatted in a vacant house. Yellow crime-scene tape draped across the interior of a vacant house. Yards that have become dumping grounds.
At times, Eric Raydon acknowledges, the Marmot Companies is buying properties that look as if they're in the Third World.
The properties almost always have extra land a big back yard extending to an alley, for instance that ultimately will allow Marmot Companies to develop additional units, boosting density in the neighborhood and increasing the flow of rents.
The brothers handle their own property management, screening tenants themselves in search of renters who share their vision for new life in the neighborhoods. The portfolio currently is 100 percent occupied.
Marmot Companies looks to move quickly all-cash purchases are a big help because the Raydon brothers believe that depressed prices in the Midtown neighborhoods may last only 18-24 months.
By then, Gary Raydon says, the natural economic advantages of Reno probably will be reasserting themselves.
"There's no reason that Reno can't be truly great," he says. "We don't see Reno sliding into the dust."
While the Raydon brothers and their investors are unashamedly looking for profits, they also are motivated by a belief that they are doing the right thing for Reno.
"Geography is destiny." Eric Raydon says "Preserving the core of a town is critical. One block, one house at a time we're changing midtown Reno, creating family- and professional-friendly places."
