Colorado Condo Conversion Questions

4 Replies

Hello all, I'm new to BP. I have several questions about converting a 6 plex apartment building into individual condos and selling individually.

This is near Durango Colorado, and I think the numbers work. As I understand it, the apartments are all separately metered, and an HOA has been established. My questions are:

How hard, and what does the process look like to change to individual ownership?

If I can do this, what happens with the HOA at the end of the deal?

Should I be concerned about being sued after the fact over roof, siding, defects, etc. 

Any idea on costs for conversion- just general idea. 

Thanks very much for any help. I have a few SF rentals, but this is out of my understanding. 

Originally posted by @Eric Nelson :

Hello all, I'm new to BP. I have several questions about converting a 6 plex apartment building into individual condos and selling individually.

This is near Durango Colorado, and I think the numbers work. As I understand it, the apartments are all separately metered, and an HOA has been established. My questions are:

How hard, and what does the process look like to change to individual ownership?

If I can do this, what happens with the HOA at the end of the deal?

Should I be concerned about being sued after the fact over roof, siding, defects, etc. 

Any idea on costs for conversion- just general idea. 

Thanks very much for any help. I have a few SF rentals, but this is out of my understanding. 

So Eric I am way late to this thread. I am a bit puzzled by one of your statements. Having an apartment building and an HOA don't typically go together. An HOA serves the common interests of the individual property owners in a condo complex. Apartments means there is one owner so no need of a HOA. Typically the process calls for creating condo documents which consist of the covenants (rules) and the condo map which is the drawing showing what "space" goes with what unit. Once those documents are recorded with the county then the individual units can be sold off. Recording the documents establishes the HOA and creates individual ownership of each of the units. You need an attorney that has done condo conversions and a surveyor who also has done them. This will save you lots of time and money because they already know what they are doing. Once the documents are recorded you can sell the individual units.

I would say this, a 6 unit building is probably more headache than it is worth. A 6 unit HOA is a pain to manage. Think about herding 6 cats. IMO the ideal size would be 30 plus units. The bigger the better.

As a rule of thumb I was told you need $100 per square foot difference between the purchase price of an apartment building and the sale price of the individual condo unit. That is, it works if you buy an apartment building at $100 per square foot and resell the condos at $200 per square foot. Remember common areas aren't resold.

Perhaps you are referring to the property manager for the apartments instead of the HOA. The PM goes away (don't forget they probably have a contract so the separation may mean you have to pay them to go away) and the new HOA can either self manage (small properties generally do) or hire a manager (now requires a license)

Hope this helps.

Thanks for the advice. I think I wasn’t very clear. In this case, 99 percent of the work has been completed. They are shown as condos now, owned by one owner. But, they never recorded all of the documents. So, I talked to their attorney, with their permission- the current owner I mean- and she said that with a few hours of work, the condo, covenants and hoa could be setup. So, my thought is to buy the six units, and have the hoa in my and my partners name. Then sell them off individually. I’m just inexperienced at this process, and it sounds like maybe the numbers need to look better to make something like this worth it. Thoughts?

Sorry for the delay. No I didn't. I went with another difficult project. I bought a 5 plex, with an empty unit to be built. So, I'm in the process of building the 6th unit. Thanks for the question though. 

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