Investing in Condo Conversions is a great way for investors to make big money in real estate. It’s simply the process of taking an apartment building or other property that has just one title, renovating it, and turning it into condos that can be sold separately through the legal entitlement process.
Other properties that can be turned into condo conversions include former warehouses, offices and other commercial buildings. They don’t have to be a former residential property to be turned into a condo conversion. Obviously, you will need a much bigger renovation budget for a non-residential condo conversion but you may be able to purchase the property for a far lower price than you would an apartment building making the returns just as great when you sell the individual condos.
If you own an apartment building or other large property already, you are ahead of the game. If not, you will pay a hefty price to purchase an existing building but the returns will be very rewarding for you. By taking advantage of the price difference between the condo market and the single building market you will dramatically increase your bank balance.
Overall when analyzed, the purchase price of an apartment or other building, the cost of renovations into condos and having the titles made into individual units is far less expensive than the total selling price of all the condos together. You will realize a huge return on your investment when you sell your individual condos.
Before you jump into investing in condo conversions, you will want to analyze the market you are investing in and make sure you will be legally able to convert the property you are looking at into individual units. A hot market for condo conversions is generally one where the price of a single family home has risen to more than a first time home buyer can afford.
A market analysis is needed to determine the sales potential of the units you will be converting into individual condos. Included in the market analysis is a study of the neighborhood the building is in and what kind of complexes you will be in competition with. You will also need to know the condition of the exterior and interior of the buildings you will be competing with as well as the condition of the units and their grounds along with the amenity package each unit has available to them.
Knowing the cost of your mortgage and how much it will cost you to convert to individual units, you can estimate the cost of the renovations to see just how much profit you can realize from investing in condo conversions.
There is a condo conversion in my area, Long Beach, CA. I’m having trouble understanding how the present association fees on each individual unit can vary as much as $250.00 per unit. My logical thinking tells me that if they’re condos and each one is individually owned, how can the HOA be different on each one. I’m told that it has to do with how many shares one had before the conversion. I would greatly appreciate any light you can shed on this for me please.
The HOA or condo fee is based on the square footage of the size of the unit. The costs of running the condo are fixed and is divided amongst all of the livable square footage in the whole building and then allocated to each unit based on each unit’s usable square footage. Therefore, the maintenance fees will vary throughout the building. However, you will find that same series condos like the 102, 202, 302 condos will have the same layout, size and condo fees.