‘Mega Landlord’ Creates Mega Housing Mess

In a 1980s shopping spree, Japanese billionaire Gensiro Kawamoto snapped up 800 homes in Hawaii and Northern California. Now he’s selling, setting off a bidding frenzy here and evicting whole neighborhoods in Sacramento County.

“I freaked when I got the eviction notice last week,” said renter Raquel Brandon, who shares a four-bedroom home in Citrus Heights, Calif., with her husband and three daughters. “Then I found out that 102 of my neighbors were getting the same letter.”

In a terse written statement, Kawamoto said he was selling all 642 homes he owns in California and 80 of his Hawaii properties to raise money for “tremendous investment opportunities both in the United States and Japan, opportunities which present themselves only once every 20 to 30 years.

“Time is of the essence,” he wrote.

The real estate tycoon is soliciting “drive-by” offers on his Honolulu properties, made without benefit of a look inside and contingent on later inspections. He has not yet notified his tenants here that they are soon to be evicted.

In California, he’s taking the opposite approach. He’s evicting hundreds of tenants in the Sacramento and Santa Rosa areas with just 30 days’ notice--but he hasn’t listed those houses for sale yet. His Honolulu law firm, Alston Hunt Floyd & Ing, said last week there would be no extensions to the eviction deadline.

“Legally, he can throw us out--it’s his property,” said Brandon, whose family has been paying $1,195 in monthly rent. “But this just isn’t right. He is willing to put thousands of people on the street, homeless.”

Unlike California, where he owns whole subdivisions, Kawamoto’s houses and condos in Honolulu are scattered through various neighborhoods.

Tenants contacted in Honolulu were reluctant to speak out for fear of jeopardizing their future. Some are bidding on their homes, or hope to stay on as renters under a new owner.

However, Kawamoto’s attorney, Carol Asai-Sato, said Friday that tenants “do not have a first right to buy.” She would not elaborate.

Investor Bought 17 Homes in One Day

Kawamoto was the most visible of a stampede of Japanese investors who spent nearly $10 billion in Hawaii in the late 1980s. The maverick investor shopped from a limousine, asking owners to “name their price” and often buying property without even looking inside. At the peak of his spree, he bought 17 homes in one day.

He is selling the less expensive of his Hawaii properties, all on Oahu, and many at bargain prices. Most are median-range, single-family homes in suburbs such as Hawaii Kai and Kailua, along with some midtown condominiums. Listing prices range from $250,000 to $450,000, with one residence at $850,000.

Many need repairs, but that’s not stopping bids well over the asking price.

“The prices are very attractive,” said Sonia Franzel, a real estate agent for Cathy George & Associates, who has placed three offers on behalf of her clients. “I have heard of people overbidding, in some cases by $50,000, to get the property. The three brokers handling the properties are overwhelmed by the offers.”

Broker James Mazzola, of Coldwell Banker Pacific Properties, said he had been told that Kawamoto set the prices himself. “It seems like he just took what he paid and added $100,000 to it.”

“They are way below assessed value, which is very unusual in this market,” Sara VanDerWerff, a Coldwell Banker agent, said Sunday. “That’s why this is so exciting. Inventory is tight on the Windward side and in Hawaii Kai. There’s usually hardly anything in the $300,000 and $400,000 range.”

Her colleague, Linda Lovell, said houses with a market value of $460,000 were listed as low as $250,000. She put in six offers on behalf of local families eager to buy, five that were above the asking prices and one at the asking price. She learned Sunday that all had been rejected. “We’re all disappointed,” she said.

When Kawamoto first arrived on the scene in the 1980s, Honolulu’s then-Mayor Frank Fasi accused him of running up home prices and unsuccessfully pushed for legislation to prohibit sales of residences to foreigners.

Kawamoto then tried to get involved in building affordable housing here. He abandoned those plans after spats with local officials, and turned his sights on California.

The “mega landlord” now owns 420 houses in the Sacramento-area communities of Citrus Heights, Orangevale, Antelope and Rocklin, where he financed construction of moderate-income subdivisions, and 160 rental units in Santa Rosa.

Kawamoto said he plans to put them on the market “once I locate one or more reputable brokerage companies in California.”

Some of his tenants have lived in their homes for more than a decade. Most are on month-to-month leases, which allow eviction with 30 days’ notice.

“I’m so upset,” Brandon said. “We don’t know what we’re going to do.”

Officials are scrambling to come up with relocation help and alternative housing for the displaced tenants, including the possible use of units at the former McClellan Air Force Base, said state Sen. Deborah Ortiz (D-Sacramento). They also hope to help muster financing for renters to buy their homes if possible.

Officials Appeal to Japanese Ambassador

Ortiz and three state Assembly members from the Sacramento area are appealing to Japan’s ambassador to the United States, Ryozo Kato, for his “help in averting this potential tragedy.”

Their letter asks him to prevail upon Kawamoto “to reconsider this brash and drastic action that threatens entire neighborhoods of families, disrupts children’s lives and education and destroys the local housing market.”

“We’ve got such a tight rental market,” Ortiz said. “Our vacancy rates are so low, there’s no way we’re going to absorb all these families in our region.”