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

[Chris Seveney]

Besides the potential code changes, make sure to carry adequate soft costs for design. Also you will need to fund the condo reserves initially and spend a good amount of money on legal fees to write condo docs that have to get registered with the state before you can sign a contract with a purchaser. My advise would be to stay far away from condos if you have never developed them.

Also in Virginia definitely be up to speed on the Virginia condominium act which you have to warrant for two years against structural and habitat defects which typically the association hires an engineer to go through the building and create a punch list