Posted by Thad on July 11, 2005 at 17:55:08:
I started doing this with a building that recently purchased. I was recommended to an attorney that specializes is condo?s. The first thing she suggested is that I check with one of the major loan underwriters here in Anchorage to find out if they would underwrite the condo?s once they were up for sale.
Turns out they normally do not. I wrote a letter to them describing the proposed changes to the common areas, the projected sales price, and the amities each unit would have. My project was accepted as an exception to their normal rules. The reason I?m rattling on about all this is that you want to make sure that once you do the conversion, buyers will be able to get financing for their units.
Here is a partial list of the issues involved;
- Check with local building officials to see what the requirements are for condo conversion. In my area there are party wall and other issues to be resolved.
- A condo association will need to be created.
- Once you have split up the building into multiple properties (individual condo?s) you will need to refinance, in order to get partial release of the units as you sell them.
- Does the building have separate utility meters?
- What does your lender think of the idea? Does he/she have any concerns about the financing issues that the new buyers will face?
Any rate, after I evaluated the cost of doing the condo conversion, it wasn?t worth it. I needed a much better ROI for going through the hassle and risk. I know this list is short of being complete, I think I would talk to an attorney before I based any projections on the condo conversion senerio.