After two months of marketing his 141 luxury condos with not one sale, Mark Rubin said he has given up wooing buyers to the Raincross Promenade project in downtown Riverside that cost him $40 million to build.
Although late last week the sign fronting Market Street said the homes were for sale, Rubin said the truth is they now are for lease and the sign soon would be changed.
Lots of people admired the tony project with its lush landscaping and fountains and the upscale appointments of the condos, including granite counters and stainless steel appliances, the Beverly Hills developer said.
But he said prospective buyers kept trying to beat down his prices, even after he shaved $30,000 off the initial list prices ranging from $240,000 for a one-bedroom, one-bath condominium to $475,000 for a two bedroom, two-and-a-half-bath townhouse. (By the way, that's $240k for a 680 s/f shoebox!! That's $352 s/f or about 4 times the average price per sq/ft)
"There were no sales," Rubin said. "Everyone wants a bargain. They read about foreclosures and think they can buy for distress prices." (No, but no one wants ass raped on price)
Because he paid cash to develop the property, Rubin said he is under no threat of foreclosure from a bank and under no pressure to drop his prices. (hmm where have we heard this before? "I'm not giving them away")
He said he had promised the city council he would attempt to sell the units but that none of the councilmen had expected the condos would sell in the current economy and nothing legally prevents him from converting the project to apartments.
Also he said he discovered that most of the 500 people who had signed an interest list when the project was under construction had assumed that it would be an apartment complex.
So Rubin said he decided about a week ago to convert Raincross Promenade's sales staff to a leasing staff.
"I didn't want to fight windmills," he said. "If after a year the market changes, I will start selling them. If not, I will keep renting them."
Rubin said he and his wife still intend to move into the development. He said they probably will occupy a one-bedroom unit in the next few weeks.
Some real estate experts familiar with the Riverside market said it is no wonder the condos did not find buyers since condos are the weakest part of what is a very weak housing market.
Leasing out 141 condos also could be a challenge, the experts said, especially at the monthly rents that Rubin says he wants for the one- to three-bedroom units, which range from $1,250 to $1,925.
"He will have to test the market," and lower the rents if necessary, said John Kalmikov, a senior vice president and apartment specialist with Lee & Associates in Riverside. Kalmikov said the $1,850 monthly rent Rubin plans to charge for a two- bedroom unit is $200 to $300 higher than the average rent of newer two-bedroom apartments in Riverside. Also he said the typical one-bedroom apartment in the city rents for under $1,000.
But Kalmikov said there is demand for larger two- and three bedroom apartments with laundry hookups as renters seek to double up to lower their housing costs. Also he said those who work in downtown Riverside and want to avoid the costs of commuting might pay a premium.
In any case, Kalmikov said, Rubin has a history as a savvy developer and he will get a far better return on the money he invested in Raincross Promenade from the rental receipts than from putting the same money in a bank at today's rock bottom interest rates.
"I would do the same if I were in his shoes," Kalmikov said. "I would wait it out."