Chris White of Site Solutions Inc., Carmel, told the Kokomo Common Council last month that Redwood has been getting anywhere from 90 cents to $1.10 a square foot for its style of two-bedroom, two-car garage, two-bath rentals. The company has built more than 2,000 units so far, mainly in suburban areas of Ohio.
That equates to a rent of between $900 and $1,200 a month, which is far beyond what any Kokomo apartment complexes are presently charging for a two-bedroom unit, said George Tikijian, head of Indianapolis real estate research firm Tikijian Associates.
Right now, Tikijian said, the average rent for a two-bedroom, two-bath rental in Kokomo is 68 cents a square foot.
The highest rent Tikijian found among 21 properties surveyed in Kokomo was the Legends of Wildcat Creek, at 71 cents a square foot. That’s about $750 a month in rent.
Redwood, White said, is targeting empty nesters who might have the resources to afford a nicer rental.
“The population is aging, and [Redwood] thinks there’s a niche. I think it’s a good idea, but I just don’t know how you support those rent levels in Kokomo,” he said.
Redwood officials didn’t respond to interview requests, but marketing materials they provided to the Kokomo-Howard County Plan Commission show they’ve been building in much more affluent communities than Kokomo.
Kokomo city officials have suggested that some higher income individuals might move here if there were higher quality rentals available, but Tikijian is skeptical.
“If you build it, they will come? That’s pretty risky,” Tikijian said. “Lenders don’t like to take those kinds of risks.”
Mullinax worked on a recent project to rehabilitate a Kokomo apartment complex and said the owner was faced with a dilemma.
Was it better to make basic upgrades and keep rents the same, or should the owner spend more on upgrades in hopes of increasing rents?