Converting an existing apartment building into Condominiums can add a significant new level of profitability to your investment. However there are a lot of considerations before makeing this bold step.

Estimating Conversion Costs

Condominium conversion is much Imore complicated than a direct “as-is” sale. The building will probably need some, if not many, capitol improvements. Architects, Engineers and Contractors must be consulted and employed as part of your conversion team. Also, you must be completely in harmony with the building and zoning department of your local governing agency before any conversion can be considered. The first step is to have your Realtor do a complete analysis of the sales activity, inventory and price ranges in your area to determin the potential market value of your expected final product.

As a general rule-of-thumb experienced investors have estimated conversion costs at 20%. Although research must be done on a local level, remember the the older the building the greater the conversion costs.

In a carefully considered and conceived conversion attempt, two to six months may be required just for the exploratory and planning phases. The total conversion time for the best projects with a minimum of hitches may be 12 to 24 months. Everything hinges on converting the right property in the right market and at the right time.

The Mini-Quiz For Suitability

The following questions must be considered and answered before you make the decision to beging your conversion project.

1. Will 30% or more of the present tenants purchase?
2. Is the property located in a high occupancy area?

3, Is the property in an area that lends itself to individual ownership?

4. Is there high population influx ?

5. Are the existing units of adequate size and equipped with sufficient amenities to warrant individual ownership?

6. Can the units be absorbed into the market in a reasonable period of time?

7. Will the unit prices be less than the going prices of homes and condos in the area?

8. Will the condominium offer a better value to the purchaser than rental units in the area?

9. Is there a limited supply of new houses and condos on the market?

10. Will at least 50% of the leases expire within 6 months?
11. Is the property convenient to transportation?

12. Is there adequate parking and storage available?
13. Is there community support for conversion?

14. Is interim financing available?

15. Are end loans for buyers available at competitive rates?
These are just some of the important questions to be considered you may have other questions to add to the list. If you want to explore your options please contact us a 303-889-0024 or email us at info@realtycolorado.com for further information.