With relatively stagnant rent rolls, many landlords are considering converting their rental projects to condo [REJ]
The author says:
“I know what you’re thinking: Condo conversions are so 1980s. But the boom is back, fueled by the torrid residential housing market. Low mortgage rates and creative financing have turned thousands of would-be renters into homeowners, and a growing number of building owners have decided to cash in on the trend by converting apartment units to condos. The boom started heating up in 2003 as the broader real-estate market experienced a home-buying frenzy.”
Condo conversions are the last to arrive for the party. Often they are competing with new developments built as condo. Rents may not support investor purchases or entice existing tenants to buy, even with an “insider discount” because landlords are bullish on the market.
Converted projects may be inferior in construction when compared to as built condos because they are often configured for tenant occupancy characterized by a lower grade of construction.
Some cities are restricting conversions because the supply of rental housing is evaporating. “In the face of a dwindling supply of rental units, the city [Las Vegas] will consider Wednesday temporarily banning the conversion of apartments to condominiums.” In fact, the amount of available rental housing has been cut in half in the past year. The moratorium on condo conversions would last 6 months [Knowlegeplex].