Condos – Developments And Conversions

Most anything that can be subdivided to be sold or rented can be developed or converted to condominiums. When we say “condo” maybe the apartment might come to mind first. Then, you may think of the commercial office building that was converted to condominium offices. Less common are the other, unusual types of condo developments such as condo parking garages, boat marinas, and other properties that are usually rented. Here are examples:

Motel Vacation Units

When Americans go on vacation to resort areas, they often stay in motels that may be located close to the action – the beach, the lake, or the ski slopes. Usually there are condo units also available. For some vacationers, the motel may be too small for an entire vacation, but the full size condo apartment would be too large.
Now, in some parts of the country, motel units are being converted to condo vacation units. The south shore of Long Island, New York, is an area of scarce and extremely expensive rental homes. Rents for one season often exceed $100,000.

Even Condo Rooftops

We said anything that can be rented can be a condo. The New York State Attorney General’s office accepted a plan which was the first in the state, where owners in a 65 unit co-op would be eligible to buy space on the roof of the building. Only owners in the building could purchase the space. A patch of the roof 15 feet 4 inches square would sell for about $13,000, plus a monthly maintenance fee of $43.00. A larger piece of roof 25 feet square would sell for $36,000 with a monthly maintenance charge of $128.00.

Vacation Houses

Currently, the practice is to lease a house to a group of young, single professionals from New York City, who split the total cost into shares that can cost $10,000 to $15,000 each. Then the group of 25 to 30 individuals decide who can use the house on which weekends and weekday vacation periods. In this way, the house is occupied about every day of the season, but never has to accommodate the whole group who have purchased shares at the same time. This has worked well for the renters.

The lessor of the property receives the full rental price at the beginning of the summer season and does not have to rent the house to different lessees for short periods of a week or two during the season.

Family Accommodations

These shared rentals of a house do not work well for a family. They also do not work for individuals who want a place available various times during the summer, such as a week or two at one time, plus every weekend.

A motel converted to condo motel units appeal to families who otherwise cannot afford to vacation in this very expensive area. These units also attract people who want privacy, which is not available in a shared home arrangement.

One large motel was converted to 64 condominium units several years ago. There were 7 one-bedroom units, 25 studio apartments, and 32 bedroom-bath (but no kitchen) units. The one-bedrooms have a kitchen and were priced at $76,000 with monthly maintenance charges of $575. The 25 studio units were priced from $51,000 to $66,000 with monthly maintenance charges of $399 to $525. The 32 bedroom-bath units were priced from $49,000 to $51,000 with maintenance of $378 per month.

A second motel was converted to 40 identical units, each with a bedroom, a bath, a kitchen and dining room. The price was $87,000 to $96,000, depending on the view from the unit. Monthly maintenance charges were set at $520 to $577.

Each of these motels had both tennis courts and swimming pools. The condo owners have access to these when they are using the units. Prices in both units would be higher today.

Aircraft Hangar

In a community in the mid west, a residential airport community was built. There are approximately 135 homes custom-built on one-acre or larger lots. Each house has an attached hangar in which the homeowner parks his or her own airplane. The homeowners are able to taxi the aircraft to the 3,400-foot runway owned by the community. The runway is owned and maintained by the homeowner’s association ($100 per month charge to each homeowner). The association also sells fuel to the homeowners at cost.

The developer planned an additional second-phase development of 225 town houses and 50 single-family houses built on less than one-acre lots. There also will be 270 condominium hangars to accommodate those residents. The hangars, priced at about $50,000, are located across the runway, with the homeowner’s association offering full maintenance and repair services.

Posted in Investment Tagged with: ,