There has been a trend over the years, a trend that seems to have caught on in some areas more than in others. The trend is converting a 2-4 residential unit into a condominium. There is a definite strategy when transforming a duplex, triplex or fourplex into four separate, legal properties but there are acondo conversion few hurdles that need to be addressed first. However, what’s the push to convert to a condo?

 In an area where there is one 2-4 property there’s likely another. And another. Duplexes and 2-4 units are typically permitted by the local government and there are rules as to the types of properties that may be built. That’s important when evaluating a 2-4 unit investment. When fourplex is converted into a condo, there are now four properties that can be offered for sale and not just one. There are fewer buyers for a fourplex, typically the realm of residential real estate investors who buy and hold for appreciation and a solid monthly cash flow.

Yet by splitting up the units, it opens up to a wider market who want to buy a home in which to live and not one in which to manage. For example, a fourplex is listed for sale in a neighborhood for $400,000. After a market study, it is determined that each attached unit could sell individually for $150,000, similar to other single family homes and condos in the area. That’s quite a profit. The individual units appeal to a wider group and now instead of renters you have buyers.

And because the duplex or fourplex is in an area with similar properties, it’s easier to appraise and market. There is a good amount of legal work that must be performed prior to converting a property into a condo, but the next time you run across such a project, take a moment to see if a conversion works for you.