Condo Conversion
Thanks Mark and Bill for your response. Can you give a run down on what happens from purchase of the units. Is there an application that needs to be filed with the appropriate city/county. Will zoning changed since it's now a condo conversion. How about Home owner's association - is this mandatory on a conversion. Is there a city/county/state guideline.
Lastly, is this profitable in the end or more headache?
I have just moved into a very nice little two bedroom apartment here in the wilds of Sherman Oaks. I rented and signed a one year lease. My reasoning very simple I needed a place to live. But this is a very interesting property. A prior developer tried and failed cause the tenants rose in wrath and prevented the improvements from taking place. Soo the nice developer ran in circles for awhile and then gave up and defaulted on the deal and now the old owner has it back. Now they are going to convert to condo. But this time they will do it correctly. They will extend to the old time tenants sponsored financing that will be so attractive they will think they have gone to tenant heaven.
Payments will increase slowly, interest rates will be very low to begin. The game plan being to carry then up through condoization and a good easy ride for the next few years as most of them are elderly. The writing of the paper is what makes this deal. Yes I am assisting and in exchange will live, love, watch sunset glow, love and be loved. Where the hell are the poppies, I guess the kids went out the other night and harvested them.
It is my opinion after reviewing costs of permits and parking requirements that it might be better to not participate as an active, but merely ride along by control of an existing unit or two. That way you can still play golf, avoid an ulcer cause believe you me the Department of Building and Safety has the bit in their teeth. New laws changing density patterns in the city and stuff have them in a tizzy.
Most Urban Planners seem to think that once they have in place a master plan which seems to solve all things that that is it. They forgot that Society Changes on almost a continuing basis. Population pressures oh yes and the economy as it twists and turns. All of these items cause change and the real Urban Planner knows that and on occasion plans ahead. We have a tendency to apply Gentrification to an area and show it as an answer. Such as an intrusion into a Slum to effect change. Ala Georgetown in Washington DC at the end of World War II. Well here in LaLa land we attempt that or we create an area like NoHo the North Hollywood Art Center and change zoning a bit and then sit back and wait. What happens out here we get an ethnic cultural wave spreading over the Valley traveling East to West and damn. AngloSax Gentrification is not the answer. You have to study this new majority cultural and plan for it service as it spreads along. Answers are very simple. Smaller shops, street venders etc. etc. etc. But damn man don't fight it cause you are fighting the people. But I digress. all I really meant to say is on Condo Conversion, as an investor, fly the edges. Come in early and command some of the units and work with the developer and gather your profits at the end.
Cheers sorry too wordy.... Lucius
getting the Planned Unit Development (PUD) map and project approved is the most costly and time consuming.
Many citys have rules on evicting tenant and the compensation that has to be paid.
If you don't mind reading zoning code, must city codes are online, and you can pull up the city you want and check it out.
Most "over the counter" planners or planner you talk to over the phone are great for getting the basic questions answered.
In Iowa you must do the following (in a nutshell):
1. Record declaration to submit property to regime including the following
a. Description of the land
b. Description of the building, including number of stories, number of apartments, and the principal materials of which it is constructed
c. The apartment number of each apartment, a statement of it’s location, approximate area, and any other data necessary for proper identification
d. Description of general common elements and facilities
e. Percentage interest which each apartment has to the common elements
f. Provision as to the percentage of votes required to rebuild, repair, or sell the property in the event of a loss
2. Separate deeds to be prepared
3. Copy of floor plans of each building, including a variety of information
4. Consent to submission of property to regime by lien holders
5. Establishment of a non-profit homeowners association and bylaws developed
You must honor tenant leases or have them agree to move out. The cost for all of this is roughly $15,000-$25,000 depending on the size of the project. (Very ballpark costs).
I have looked into all of this and think it is a great idea. I have yet to find a good building to do it on. Currently I am working on something similar which is taking a side-by-side duplex and converting it to "patio homes" which basically meanst that the lot line is split right down the middle of the structure. Each side is responsible for all maintenence and the covenants put in place the rules and what not that a homeowners association would. It works much better as there are only two owners here.
GOOD LUCK