Condo conversions worth it?

September 29, 2005 5:10 AM

I have good reason to suspect that the apartment complex in which I live might be going condo. This is a pretty common occurrence in the area (southeastern FL) where I live. I've considered buying into others before but always hesitated - the pricing seems good but there must be a catch. I've heard that if my apartments go condo that I can get a really, really good deal...but...

...I've heard stories about structural damage that wasn't discovered until after the sale, mismanagment of the properties by new boards, maintenance fees being raised, and that a high percentage of units end up being rented to loud, dirty people with overseas (as in absent) landlords who bought the condo as investment property.

The situation sucks. I sometimes think that I need to buy one because there will seriously be very few rental apartments left and it'll eventually be too expensive to rent anyway. Houses and new condos are way out of my price range.

posted by superkim to home & garden (6 comments total)

I have a little experience with this here in the Boston area.

I was offered a $10k "discount" on an apt I was living in when it went condo. They clearly spelled out that there would be no upgrades done to the place if I bought. It was a 100+ yr old building and my apt wasn't in the best shape, so I moved instead. So I guess that's part of the catch you were talking about.

As for absent landlords, often condo associations will set a limit on how many units must be owner occupied to avoid exactly what you're worried about. You can ask these questions before you buy. Same for maintenance fees, if it's a new conversion you may want to ask how the reserve will work (to fix things).

I bought a condo 2 yrs ago in an apt complex that was converted over 10 yrs ago. They still haven't worked out all of the board mismanagement business, but my mortgage + condo fee are only about $50 more than I was paying for rent on an apt down the road, so for me it's worth the trade-offs.
posted by jdl at 6:07 AM on September 29, 2005

If there's a group of you who are considering purchasing, maybe you could get together and share the cost of having an independent property inspector (and possibly a structural engineer as well) to go through the building? The last thing you need is to be saddled with large expenses to keep the building from falling down.

I mention having an engineer take a look because most property inspectors have a "visible aspects only" policy, and you might want something more thorough than that.
posted by lowlife at 6:10 AM on September 29, 2005

I suggest forming a tenant association with other people in your building(s). This exact same thing is happening to us here in DC, and it's remarkable what the tenant association has been able to get so far (and we just hired a lawyer last night). Remember that management wants to deal with you individually because it's easier to get everything they want (higher prices, fewer headaches, etc). The only realistic chance you have of protecting your rights, getting a better deal, working out a settlement to cover moving expenses, etc., is to work together.
posted by arco at 6:15 AM on September 29, 2005

I previously lived in a condo with a roommate who owned the place, which was a former apartment coverted to condo (in the 70s).

I can't agree with arco enough about getting together with other tenants. The problem in this complex was that the majority of the units were owned by 1 of 2 owners, who rented them all. They pretty much ran the HOA because of this, and screwed over the other owners on a regular basis.

Go over the HOA charter with a fine toothed comb. Make sure they limit the number of renters, etc.

I live in Central Florida, and we're seeing the same explosion in condo conversions.
posted by kableh at 8:00 AM on September 29, 2005

I've heard that if my apartments go condo that I can get a really, really good deal...but...

People and companies who own and develop condos are not charities. They save some money if you do buy in (less marketing, no fix-up costs, etc.), but they have absolutely no reason (nor are they compelled by law) to give you a really, really good deal.

I sometimes think that I need to buy one because there will seriously be very few rental apartments left and it'll eventually be too expensive to rent anyway.

A strong argument can be made for exactly the reverse - that (as you point out) if a lot of units are bought for investment purposes, there will be a lot of rentals available. Obviously, a condo conversion will result in fewer renters than when the building was all rental units, but new condo construction does add rental units to the market. (My understanding is that there is a LOT of new housing being built in southeastern Florida, which has to mean that supply eventually will exceed demand.)
posted by WestCoaster at 12:34 PM on September 29, 2005

I would say to you, that you should buy in only if you like the place a lot to begin with, the price is right, and you're ready to take that step in your life. Keeping in mind, of course, that real estate in south Florida is not getting cheaper each year...

I bought into a condo conversion as a non-tenant. (SW Florida). There are definitely some things I wish I had known to ask when I was preparing to purchase but overall I have been pleased. My own experience has not been 100% perfect but I would probably do it all over again, even knowing what I know now. Definitely, definitely, definitely do what you can (in conjunction with othe renters/potential owners) to ensure that a few investors dont buy up half the place. Not only will they control the board, they will actually drive rents DOWN and this will have an effect on the quality of renters they bring in.

Not much to add really, but if you want to pick my brain further about my experience with this, feel free to drop me an email (in profile).
posted by contessa at 1:59 PM on September 29, 2005