Many real estate investors find greater value when buying smaller, multi-unit properties. A duplex, triplex or fourplex for instance. Upon evaluation of the acquisition price, the costs of repairs and the potential cash flow from the units, the profits cancondo conversions be greater compared to a similarly sized single family home. With a four unit property, there are four monthly rental checks, not one.

 

But when it’s time to sell the property, the entire unit must be sold. Sometimes that can raise the price too high for many investors looking for residential rental homes. With a duplex you can’t sell just one side of the property, it’s all or nothing. Unless you turn the duplex into a condo.

That’s right. You can turn a 2-4 unit property into four separate condominium homes and sell each one individually. There can be two motivations for this. The first is the selling price is lower than the price for the entire four units and second you’re able to market to more buyers, due to the lower price point for the individual home.

Converting a duplex or 2-4 unit home into condos isn’t necessarily as easy as ordering up a title report. There is a lot of information that needs to be prepared and the developer must follow specific legal guidelines including ownership rules, covenants and restrictions. For investors that calculate that turning a duplex into a condo is more profitable and marketable than selling the entire property, it’s important to work with an attorney with experience in condominium conversions.

You also want to make sure there are similar condominium projects in the area that consist of two to four separate condominium homes, otherwise lenders will be reluctant to place a loan on the condo if there aren’t any comparable properties in the neighborhood.

Converting a small property into a condo is an idea that should be considered when evaluating a project’s potential. If there are other two unit condos in the area, you may have earned more on the sale with two separate contracts instead of one.