Condo conversion in Montpilier, Vermont


A 6-unit apt. building is up for sale in Montpilier, Vermont. Currently, it brings in about $2,800 a month in rent. It’s selling price is $225,000. The realtor said the owner needs $175,000 cash out and can take a 2nd mortgage for 20%, which is $45,000.

I’m researching possibilities of a condo conversion regarding this property. Does anyone know of the laws in Montpilier, Vermont regarding this? Any advice for me.

My credit is poor. Is it possible for me to apply for a bank loan for the mortgage using a co-signer who has excellent credit, or having her as a partner on the loan. Or will my poor credit rating diminish her higher score.

My goal is to find a house that’s been converted to apartments and purchase, using a lease option or another creative way, and then arrange the mortgage to be covered by the current rents so I can live rent free. Okay, this is long. Any advice or suggestions would be much appreciated. Thank you.


First thing you need to find out is how condos are selling in that area. Ask your realtor what the average days on market for comparable sized units is and how much they are selling for. You need to find out the profitability of the project before you even think about taking it on.

After that you need to talk to a real estate attorney that is familiar with condos as he will need to file the appropriate paperwork to make them condos. He should be familiar with the local area and if there are any restrictions on this type of thing.

Also, what are the leases for the current tenants? Yearly? Month to month? You can’t just buy the building and toss the tenants out to do your conversion so you should have a plan ready to do this. Either waiting until the leases expire, paying them to leave, selling the tenants the unit they live in, etc. You won’t be able to sell them until the leases are expired and the tenants have left. You probably can convert them on paper prior to them leaving though, I don’t see an issue with that, again consult your attorney.

Where will the rehab money come from? I assume you will probably have a bare minimum paint, carpet and basic fixup in these units to make them sellable.

And last but not least do you have the cash to carry that mortgage until you can get the units sold. If you can’t afford to carry empty units this is not a project for you.

Some states give renters 6 months to year to find a new place if the building goes condo. There may even be relocation assistance required. Most likely, you will need to bring the whole property up to code, including off-street parking requirements. In my area, the plan submitted to the zoning authorities costs about $6,000 and there is no guarantee they will say yes.

Thanks for your advice everyone. I looked at the apt building today. What a dump. Although it has potential, it needs major work.

This apt building currently brings in $3,032 a month in rent. After expenses, it brings in about $2,500 a month.

Is it possible for me to go to a bank and ask for a or $175,000 mortgage loan at 5.5% for 30 years, that would amount to payments of $993.63 a month, provided I show them that the rents would bring in $2,500 a month, more than enough to cover the mortgage payments.

I have poor credit and don’t have a steady income, as I work for myself. But still, why do banks care as long as you’re paying the mortgage? Any advice. Thanks.

There’s a snowballs chance in hell that the expenses are only $532 on $3032 gross rents. Expenses are traditionally 45-50% of gross rents. Do some more research on this forum before even THINKING about buying a rental.

The bank is only going to count about 75% of the rent as income. Just a rule of thumb, the banks usually like to see your income at about 3 times the mortgage payment.

There have been a few reports of banks not allowing owner-carry-second-back as the down payment. Requirements for loans have gotten a lot tougher.

Your best bet is to call a couple of local banks and make appointments to speak to a commercal loan officer. A six unit is going to be a commercial loan. Take all the figures about the building and ask the loan officer what they have that might work for you.