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Apartment Complexes Converted To Condos?

The owners of many apartment buildings have found that rental prices have not changed much, and may be thinking about selling. The owner of an apartment complex, rather than sell, realizes the condominium conversion may be a good way to cash out the property.

After sitting out the recession, many professional investors and contractors are now “in the hunt” for apartment buildings that can be converted for profits.

Whether a certain apartment property or complex is suitable for conversion into condominiums depends on these factors:

• It must be in good condition structurally so that a small capital investment can restore it to a safe and marketable condition. These costs may come as a result of the owner’s engineering study or the building code provisions of the political subdivision. This money spent on structural restoration is important but does little to enhance the salability of the units.
• The design and layout of these units should be relatively spacious and functional. If the condominium will be marketable quickly under normal market conditions, buyers must see them as distinct and private apartments.
• It is best if the complex is near shopping and business centers.
• The building or buildings must give the appearance of being durable and refurbished like new so that buyers of a unit can picture it as their permanent residence.
• The best location would be near a neighborhood of single-family homes that are valued at a price substantially higher than the price projected for the completed condominium units. Single-family homes are the competition for condominiums, so a location near higher priced properties makes the condominiums more marketable.

Other favorable factors include:

• A location near a unique neighbor asset such as a park or a school.
• Solid construction including noise dampening insulation, good design, and good parking.
• Existing rentals should be month-to-month or short term leases that can be honored during the conversion.

If these factors are present the complex might be a good property for conversion. The owner or contractor can then begin the necessary feasibility studies as if it was a new property being built from the ground up.