Apt complexes being converted to Condo’s before its “Too late”

[CAwireman]

In talking to an apartment leasing agent, they told us that the apt complex was “Remapping” to condo’s.

This is not to immediately begin selling as condo’s but to:

a) make the overall complex more attactive to a buyer if the whole thing were to be sold.

b) avoid being shut out of the opportunity soon (SD is to begin disallowing apt to condo conversion – I wasn’t aware of this. Is it true?).

If the goal were to convert to condo’s the time couldn’t be worse.

If the goal actually is to increase the long term value, or the short term value to a company that might buy it now, sit on it until the market turns, and then try to sell condos in a much more friendly climate, then hmmm, might be a reasonable idea.

[SD Realtor]

cawireman –

The mapping process is a pretty big chore. There are alot of apartments that will go ahead and move forward with the mapping process for reason A that you stated. I was not aware that the city was going to not allow conversions. I “thought” that the conversion process was going to become a whole lot more of a chore because there was going to be a mandatory EIR, (Environmental Impact Report) with conversion the conversion process. I am definitely not an expert on that so I am I will be corrected. SD Realtor

[surveyor]

cc

i just submitted a condo conversion in the city of san diego in december 2006. no eir requirement yet. i know aguirre has been threatening that for awhile now, but nothing has been done yet. this doesn’t mean this requirement will not be imposed.

[patb]

sounds like they think they can get a deal on re-mapping services,
i would guess you need to hire a title service/attorney to write
ne wlegal descriptions and to file a condo corporation and
bylaws.

3 years ago, it was probably horrifically expensive and now
what you have is a empty pipeline, so if you do all the paperwork
now, it’s cheap, and in 5 years when the condo market picks up,
you have that already done, and you can sell the units or sell
it to a condo investor as a flip deal.

[CAwireman]

On the other hand, I wonder if there’s a penalty involved with remapping the condo’s and deciding to continue using the properties for individual rentals.

I rented in a complex in Mira Mesa (Summerset village). The units were sort of referred to as condo’s. You had to provide your own washer/dryer and fridge. And, some utilities had to be paid individually.

I wonder what the downside of remapping/rezoning would be if the complex remains rental only? (Just the initial outlay for the remapping effort? Other?)

Would be curious if anyone has insight into this.

[Carlsbadliving]

No penalty involved. The way a condo conversion works is that you need to subdivide the one parcel into many pacels. It’s called an airspace subdivision. Basically, you’re applying for a tentative tract map with the City to create individual parcels for each unit in the complex. That creates the separate ownership.

In most cities you have two years to act upon a tract map before it expires. And even then, you can apply for extensions of several years. So it is possible to convert to condos and continue to use as rentals, you’ll just have to go through the hassle and fees of an extension down the line. And it’s not out of the question to be denied of an extension. You’d have to have a good reason why you didn’t follow through with the tract map.

And yes, presumeably this would make the complex more attractive for sale. Basically, the complex would already be entitled for separte ownership if the new owner chose to do so.

[patb]

i imagine you could do a virtual apartment complex anyways.

Do the subdivision, file the condo corp, but have a holding corp
own the units, and then sell the corporation as opposed to
selling the building.

it’s a bit more complex and there may be some
tax implications, compared to the tax treatment of
a multi dwelling unit, but, if you are careful it shouldn’t be
punitive.

[Author]

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