A condo conversion is generally the conversion of a multi-family dwelling such as an apartment, which is owned by one entity and divided so each dwelling unit is a single-owner property or condominium. Conversions have been a mainstay in most large cities, including Phoenix, for many years. Payson is soon to undergo one of the first conversions in the Rim Country.
A converted unit can offer many advantages for the savvy renter, buyer, or investor.
Conversion units are generally more affordably priced than new units. The developer will usually sell the unit in an as-is condition or provide remodel packages that will essentially make the unit look brand new.
First-time homebuyers have the opportunity to get help with the down payment through programs like AmeriDream or the Nehemiah programs. Additional benefits for the renter are that they get out the rental trap, they have a valuable tax deduction, and they are putting away equity in their home every month.
According to Chuck Donnels, chief executive officer of Right Place Properties, the rental trap is where you have no control over the cost of your rent, you have no control over the repair of your home and you lose tax benefits every year. Even though your monthly payment may be higher by owning, this can be offset by tax deductions.
From our experience, a converted condo gives you the ability to be in a choice location with a lower cost of ownership. For example, one community in the Valley that we have studied and invested in is located in an area of Scottsdale where new one-bedroom condos start at more than $700,000, yet a converted one-bedroom unit in a complex within eyesight of the upscale, new units start at under $200,000. The other benefit of the converted units in this particular community is that the complex was built prior to the land in the area becoming such a premium commodity. Therefore, the units are more attractively spaced which allows for more greenery and less concrete and asphalt.
As with any home purchase, a prospective buyer needs to do their due diligence in investigating the property. This should include reading the public report and the CC&Rs (Conditions, Covenants and Restrictions) of the community and have representation by a qualified Realtor. Of utmost importance is the developer's funding of the HOA (Home Owners Association). This is to assure that there will not be any surprise expenses down the road for the homeowner.
Ray Pugel is the designated broker for Coldwell Banker Bishop Realty. For more information, call (928) 474-2216.