An offshoot of Newport Beach-based cabinetmaker RSI Home Products Inc. has gotten into homebuilding with plans for inexpensive, easy-to-build homes.
The goal of RSI Development is to build homes across the western U.S. The company is funded with $100 million from RSI Home founder Ron Simon.
It is taking a page from cabinetmaker RSI Home, which has been able to compete with Asian rivals with lean, efficient manufacturing.
In essence, RSI Development is building big cabinets,homes,using manufacturing techniques honed by RSI Home.
“We have improved and streamlined outdated building practices and rethought every aspect of homebuilding,” said Simon, chairman of RSI Development.
The company has acquired several parcels of Southern California land for homes and is in talks for more throughout the country, according to RSI Development.
It plans to work with local governments to provide homes for low-income buyers as well as build more expensive homes as part of housing developments.
Last week, RSI Development presented two low-cost homes to Santa Ana Mayor Miguel Pulido and other officials as part of the city’s bid to develop affordable housing.
The homes were built from the foundation up in 15 days. One was 1,600 square feet and was sold to the city for $85,000. The other was 2,000 square feet and went for $95,000.
“The houses were delivered for unheard of prices,” Pulido said.
Santa Ana looked for a builder to put up homes on city land for nearly a decade, Pulido said.
The city, which provided the land, is set to sell the homes in a lottery at $119,000 for the smaller house and $144,000 for the larger one, according to RSI Development.
Santa Ana waived fees, which include planning, public works, building and school costs.
Robert T. Shiota, a 30-year homebuilder who most recently was president of builder Artisan Communities LLC in Orange, heads RSI De-velopment as chief executive.
He leads a team of about 20 people. They include engineers who came from the cabinet making side of the business. Others are from homebuilding.
RSI Development worked for more than a year on prototypes in Mira Loma, according to Steve Cauffman, vice president of sales and marketing for RSI Development.
The company could end up competing with entry-level and more upscale homes from longtime industry players such as KB Home in Los Angeles, Lennar Corp in Miami and Pulte Homes Inc. in Michigan.
Market Conditions
RSI Development is getting into a market overwhelmed with unsold houses built during the housing boom.
The company’s looking to the long term, according to Cauffman.
“This is the time to come in with a model to address affordable housing,” he said. “We know we’re going to be in a challenging environment for a while.”
Last year, Simon sold half of RSI Home Products to Toronto-based private equity investor Onex Corp. for $318 million.
It was his second big deal after selling Perma-Bilt Industries, a cabinetmaker founded by his father, to an Australian company in the 1980s. He left to start RSI Home after Perma-Bilt’s owners rejected his plan to compete with emerging Asian rivals.
Perma-Bilt no longer is in business, while Simon used his plan as the basis for RSI Home.
Simon’s also a philanthropist through his Ronald Simon Family Foundation, which has given away more than $7 million in scholarships to high school students since 2003.
