Apartment to condo conversion

[John Brinkos]

Is there anyone in the Hampton Roads (Norfolk/Portsmouth/ Virginia Beach area of Virginia) area that is enjoying success converting small multi's (4-8) or small apartments into lower density condo's?  I am interested in converting a 8-plex into a 4 unit condo with 3/2.5 units in B+/A neighborhood.  The building needs major repairs (150K) and is vacant so it is a prime time to convert to condos in a lower density for a potentially higher cashout after the rehab.  The area is working to reduce density and the project should be welcome by the neighborhood and the city.  

My concerns with the project are

- the time to rezone and approve reconstruction

- my ignorance in the process to rezone

- the structure for the condo management after the sale

- I saw, what seemed like, many start and fester or fail in the HR area a few years back so I am very cautious at this point.

The numbers and the project look very solid even offering the investors 25% returns if I can finish it out and start selling in 10 months but I am not sure that is possible with the rezoning even though it is reducing the density in the area.

Any feedback or insight is welcome,

John

[John Brinkos]

Wanted to update everyone in this post line.  I spent some time with a lawyer this weekend and read over a couple Public Offering Statementa for Virginia.  If you haven't dug through one of these line by line in your area and you ever think about a condo conversion grab one, a highlighter and notepad.  Set an hour or two aside and take some notes.  

As Chris said there are a lot of architectural costs, management costs and ongoing involvement that may come with the conversion that you wouldn't initially expect.  It seems that there is a break even point based on the number of units and the 4 that we were planning just didn't cut the mustard.   The property will stay an 8 plex

Have a great day and keep moving forward looking for the next deal!