Chicago Condo Conversions?

Looking at sub-2 purchase on 14 unit apartment building, foreclosure bailout.
Terms with owner & bank are in place but the property is almost vacant.
Leaning towards Condo Conversion and would like any info on where to begin.
Any suggestions are much welcomed and appreciated. ???

Condo conversions can be timely & costly. I would investigate further to see if keeping them as apartments is a viable option. How is the area? What type of renters would live there? Could the apartment be rehabbed and the vacancy issue solved?

The first step in condo conversion is to contact the local zoning department. Can these be turned into condos?

Has a market study been done to determine if condos will sell in this area?

Patti Porter

How much time is usually involved and what are the typical administrative cost associated
with the conversion process?? The are many condo conversions & new construction in the
immediate area so I would assume that the market study is fine to proceed w/ conv.

The property currently consists of 7-1br & 7 studio units on 3 levels w/ garden floor as well.
I would change the configuration whether we go condo or not. My plan is to convert the
7-1brs into 4 - 3bd 2bth units & the 7-studios into 5 - 2bd 1bth units for a total of 9 units,
condo or apartment! The 2-3 br rents are stable at 1k-1.4k and condos are in the 125k-225k
range. My price point for 2’s would be @ 150k and 3’s @ 175k well within market norms.

The buy out is @ 500k with @ 350k in renovations to be completed. Granite, hardwood,
spa baths, high end lighting & gourmet kitchens will be some of the features of remodel
to insure quicker turnover. Quality work & pricing sells, and with the high end upgrades
& modest pricing we hope to turn over units pretty quickly upon approval of conversion.

If for some reason conversion does not get approved we will keep as apartments and perform
rehab with less costly upgrades.

I am curious where in Chicago this 14 unit is. Yes Studios are hard to not only rent but sell.

The one thing I will warn is that you need to be aware of the average time on market if you sell the units. All across Chicagoland, the days on market has been going up.

Have you ever done a condo conversion in Chicago? Do you know everything you need to accomplish on this?

Located on the N.W. side of Chicago near Oak park area.
This will be my first attempt to convert to condo but have
rehabbed large apartment complexes before with modest
upgrades. I know that the sales market is a little soft right
now but with the modest pricing and superior upgrades
I can still make a nice profit without killing the new buyer.
We are well below what others are selling for and in a
decent area with new developments/conversions around.

What advise can you give me on what to expect???

Any one else???

I would look at it from a financial prospective. Since it is almost vacant you have some upgrades that have to be done anyway just to get and keep it rented. I would look at the present value of the income stream after the renovation including all your initial expenses. I would then look at the present value of the units sold minus the costs to buy, carry and sell. What ever is has a higher PV do that.

Your price point at sale sounds realistic, but not your price point to convert. 350k in total renovation? Is that including holding costs? Have you bid the property out to a handful of GCs already? Have you considered potential liability issues if you don’t gut the building and redo the plumbing and electrical? Have you factored in 5-7% commissions to have a top notch RE brokerage market and get the units sold as quickly as possible? You could save and go discount but then you may increase holding costs and lose in the long run. You could skimp on renovation but be facing liability or long market times and nowhere to go but forward. We are doing a 24 unit condo conversion Near North currently and I also represent a few out of state developers who do projects in Chicago, so no BS, plan and execute carefully. Also, on the studio note, studio condos do have slightly longer market times in general, but sell for more PSF than any other condo. i.e., the old Harry Langer building at 1140 N LaSalle.