Four-fifths of Rock Creek Gardens, a 505-unit apartment complex in Silver Spring, is being rehabilitated and converted to condominium ownership, eliminating a large source of moderate-rent housing for the lower part of Montgomery County.

The 22-acre complex, built by Eig & McKeever after World War II, is south of East-West Highway between Washington Avenue and Colston Drive.

The conversion is being handled by the LaVay Corp., headed by Gerald LaVay and his sons, Douglas, 35, and Richard, 26, Gerard LaVay was a pioneer in the development of condominium town houses in Montgomery County. His Crest and Crest II communities were built on Western Avenue in the 1960s.

LaVay said that Rock Creek Gardens, which has masonry construction and plaster walls, is his first major rehabilitation. The property was purchased last January for $6.7 million from a partnership created by the Draper & Kramer mortgage banking firm in Chicago. LaVay said there was some financial backing from a European investment group, but he declined to name it.

Several condominium models ranging in price from $42,500 to $85,000 are being shown and 90 buyers have already made $1,000 deposits. Conventional financing with low buyer down payments has been committed by Washington Federal Savings & Loan Associaiton. Monthly condominium fees are expected to average $66.

Richard LaVay, who had a hand in planning the project along with architects Smith, Segreti & Tepper, said that the converted Rock Creek Gardens would be notable for its loft spaces and skylights.

Rock creek Gardens currently offers rental units for $237 to $280 a month. LaVay said that only 45 tenants have indicated an interest in becoming owners, despite 10 percent discounts.

When asked to comment, Tad Baldwin of the Montgomery County Housing Opportunities Commission said his office is "sorry to lose that moderate-rent complex." He added that his office had tried unsuccessfully to aid tenant-group attempt to purchase the property, which began the condo conversion process before the county government's recent freeze on conversions.

One hundred units will be reserved for rental occupancy by persons 65 or older for at least 24 months. The first 100 rehabilitated units should be ready by spring.