Property owners who want to upgrade their building and turn them into condo conversions… which in turn converts their properties into a multi-unit condo that they can sell which typically and collectively, sell for significantly more money.. By dividing the building into separate components or condos, owners can sell units and ‘cash’ out to maximize their profit instead of being in the landlord business.
This particularly works where demand for home ownership is high, and space limitations exist. Tenants who want to own their own home have a better opportunity at getting housing that may be easier to afford… The property owner enjoys a faster return on investment (ROI) because converting property into a multi-family condo takes less time compared to building a new structure and helps the homeowner sell for the highest (combined) price possible .
However, turning your multi family into condos has pros and cons. Here are some.
THE PROS OF CONDO CONVERSION
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Affordable home ownership
Renters can own the property at a reasonable price because they usually get first dibs on their units before they’re listed. This makes property converted to multifamily units more attractive, especially for first-time home buyers. Condo conversions also attract those looking for more affordable homes compared to buying the entire property. This can be an advantage at a time when prices continue to rise.
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Tenants may have a say
Renters can become owners who contribute to building management and become part of a condo homeowners association.
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Less work for owners
Renters in buildings for condo conversion may want to buy the unit at once, thus sparing the owner from spending time and effort in marketing and selling units. Most condos have been renovated top to bottom. Typically the attraction to a buyer has always been that they can buy a ‘new’ home that has been completely renovated and requires very little upkeep for years to come. Condos are usually sold at a premium because they are seen as more of a luxury product… all you have to do is move in. All the ‘heavy lifting’ of dealing with home ownership upkeep is done! The advantage to never have to worry about future work or updating for many years to come can be well worth the peace of mind…even if the out of pocket is a little more than you might have planned on….
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Uniqueness
Many condo conversions transform rental apartments into condos. Others repurpose churches, schools, and warehouses. Unique condo conversions may offer equally special features like higher ceilings, unusual windows, bigger rooms, and interesting architectural details. The more unique the conversion, the more value typically created!
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The structure is in place
Converting an existing residence into multi-family units has added benefits. The structure is there. Developers are not building from scratch. Since work is indoors, builders are not at the mercy of weather conditions that delay construction.
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Flexibility
Each dwelling may be mortgaged, financed, and/or sold individually..
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More profit and ultimately a better selling price
Converting the property into smaller multifamily units will enable the seller to charge a higher total selling price. Smaller units can be more affordable for a buyer while also generating more profit for the Seller.
THE CONS OF CONDO CONVERSION
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Limited features
The converted property may not have the features (e.g. fitness hub or rooftop garden) of a newer, more traditional condo building. Take into consideration who your audience will be…your buyer will NOT typically be someone who is looking for all the benefits of a bigger luxury complex. This is where helpful advice and planning with an agent who deals with conversions on a regular basis can be a big deal!
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They’re outdated… or not, and that could cost you!
Old, historic structures may have worn-out roofs, windows that aren’t energy efficient, and other features crying out for repair and upgrades. You have to check in with your local historical society to find out what you can or can’t do with the structure. Then, you have to deal with the cost of upgrades. There can be a long conversion process. The procedure can last anywhere from nine months to two years to complete. The Bremis Collection consulting team specializes in advising multi family property owners on the process, finding the best team to work with (contractor, architect, lawyer, etc) and giving advice on the best amenities, improvements and even what improvements are worth the most money…and finally, assessing the ultimate selling prices to market your units for when you go to market. Bremis Collection consultations are always free!
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Tenants have the option to extend their stay
In Somerville MA you must first get permission from the Condo Review Board but tenants could stay up to 2 years. Only in Somerville is this ‘tenant’ protection part of the approval process. Most towns do not have such a cumbersome condo conversion process..
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Expenses can get out of control quickly! Get a great team together and don’t forget to include all costs in your analysis…
A lawyer, surveyor, Realtor, engineer, tax consultant, and accountant must be hired, and you have to consider their fees in your cost/benefit analysis. Bremis Collection and the Steve Bremis Realty Group are experts in navigating the entire process, so there are no earth shattering surprises and the conversion is as smooth as possible. There are SO many moving pieces and it can all be extremely overwhelming. Delays can also be extremely costly and must be at least factored in. Getting an experienced agent and consultant can make the difference between going bust or a hugely successful project. The Bremis Collection from SBRG is here to help!
Thinking of converting your property into a multifamily condo? Contact the Award Winning Agents at the Steve Bremis Realty Group. Call 617.828.1070 or message us here.