Converting condo to multifamily

[Frank Robinson]

Does anyone have experience converting a multi condo unit house to simply a multi family property? If so, what is the process like a condo association from multi tax lots to a single tax lot. Looking at a 5 unit condo property that should really be a 5 unit multifamily.

[Stuart Udis]

@Frank Robinson Why do you say this property should be a 5 unit multi-family rather than a 5 unit condo?  If you’re the owner of all 5 units you have control. You’re not reliant on others to weigh in on special assessments, leasing regulations etc. The main differences I can spot are the fact you will have 5 separate tax parcels/ID’s to pay and you will finance the property using a blanket mortgage. Operationally nothing changes.   I don’t see the condo ownership  being adverse to your objectives. In fact it will more likely be advantageous to you. 

I see you're based in Philadelphia as well. Is that where the property is located? I've developed a number of small condo communities in Philly. Depending on the neighborhood you may actually achieve higher appraisals if appraised as 5 separate units. Most importantly having the 5 separate tax ID's will give you the flexibility to sell the units individually in the future or perhaps it becomes a potential exit strategy you pass along to the next buyer. It's far more difficult to form the HOA, obtain the approvals and new tax ID's than it is to extinguish the existing one and would advise against it.

As an example I constructed a 4 unit condo building in the Mount Airy neighborhood of Philly at the beginning of the pandemic. I opted to keep the building as rentals but had already obtained the 4 separate tax ID's and recorded the HOA declaration. I refinanced the construction loan into a blanket loan and operate it like a 4 unit multi-family and achieved more favorable valuations being appraised as 4 separate condo units. When I choose to sell, I'll make the determination of whether it's most beneficial to sell the units individually and if I do, it's an easier process since the declaration is recorded and the city already recognizes the 4 separate condo units. For now, it operates as a good rental with top If market rents.

https://www.compass.com/listing/18-west-phil-ellena-street-u...