Apartment Building Into Condos?
What books and resources would you recommend to read to get familiar with the requirements and costs of converting an apartment building to condos for tax purposes and the possiblity of the resale of each unit?
Thanks
What are the tax benefits? Zach
Property tax is generally 3% of the assessed value. Nearly all residential property is rolled back approx 50%.
For example, an 8plex I am looking at has property tax of $12182/yr (assessed $343,570). Typically individual condos will appraise for more but with the rollback of 53% in my area, it should be around $7300/yr saving me almost $5000/yr.[ Edited by myfrogger on Date 11/19/2003 ]
Ok, I understand the important part - saving 5k. The rest is still a litle hazy, but certainly see why it' might be worth your while. I'm discovering that here, in Michigan, quite a few apartments have been converted. Good luck - Zach
Apartment to Condo conversions is a VERY profitable business right now. Look for a reputable and EXPERIENCED law firm that dors condo docs. START there. If they have the experience they will be able to give you an outline of the steps in your area.
My fist step would be the financial analysis. If your mechanicals are ok ( Water, electric etc) then take your story to the attorney.
I have not seen any books on this topic but would like to. I have sold apartments to condo converters. They do very well.
Gregg
_________________
Gregg Fous
Investor/Developer
"If you wait for all your ducks to get lined up, you will never get into the water"[ Edited by GFous on Date 11/19/2003 ]
Do you find more money in converting the units to condos and then reselling them or simply keeping the tax advantage when you rent?
What about 2br units? I stay away from 2br homes but what about condos?
I cannot be to helpful as my experience in this is limited to California. But I did some and the biggest problem I ran into was having enough parking. If you can satisfy that with Building and Safety the rest is easy.
Most of the older properties that I converted had single meters on utilities the landlord paid all. Nowdays easy solution with Computers you can do an inhouse system and bill everybody individualy without the expense of running new lines. Its all electronic.
Some I did Coop which is in essence a Corporation in ownership and each owner of a unit received so much stock. Strangely enough that was a little more difficult and expensive. But it worked well.
You really need an attorney that is experienced and a Surveyor who also has some experience.
Want to have some fun and have rich relatives after you are gone. Hold back the ownership of the land, put it on a 30 to 50 year lease, monthly payments due from all of the unit owners. At end of lease take over the building and all the units therein. Or if your relatives are nice they merely re-sell the units all over again. They will remember you.
Lucius
I appreciate the reply...does anyone else know of any reading material to get me started?
myfrogger,
I have heard that in Iowa, condos have to have double walls. Since most apartment buildings are not built with double walls, I've heard it can be tough to accomplish what you want to do.
I do not know this first hand, but this is what I have heard.
Good luck
I don't think this is correct because I have seen condos without double walls... I'll try to let you know what I find out. I'm sure someone on here can point me in the right direction though? I want to have some knowlege before talking to an attorney.
If you were to build condos, would today's code require double walls?
Not sure exactly. PM me in about a month or so and hopefully I will have more figured out. My corperate attorney said to call him tomorrow. I am not sure if he is the one to talk to or my real estate/title opinion attorney.
Thanks,
Matthew
I build condos.
Building requirements TODAY are same whether it is a condo or an apartment. But this was not always the case. ( At least in Florida)
Lufos makes good point -- In Conversion you may have to comply with current codes. Need to check city/county where you are. ( Parking, for example)
Some of the obstacles are:
Defining common elements
Utilities
Legal Structure
I would love to tackle a conversion project. With interest rates where thay are now condos are the way to go.
Gregg
_________________
Gregg Fous
Investor/Developer
"Developers Make it Happen"[ Edited by GFous on Date 11/22/2003 ]