Analyzing a multifamily with the idea of turning it to condo's?

[Dolores Waldron]

Good Morning,

How does one go about analyzing a multifamily flip with the idea of turning it into condo's - eg. a 2 family - Does one analyze it as a regular flip deal with the ARV being much greater due to it being sold as condo's?

Thanks for any advice.

Dolores

[Josue Velney]

Dolores Waldron I like the way you think! I have one two family in Medford and I am still undecided if I want to flip or hold. Here is what I have learned. One all utilities have to be separated including common area. Because I'm undecided I have two cold water lines now. Plumber said it was easy so I did it just I case I decided to sell as condos. You will need two water meters. The city of Medford will make you pay $250 for the extra meter. If you get two meters then decide to keep as two family the city will make you go back to one. If you decide to go with condos have your lawyer create the docs which is like 6k. Don't make the house condos till day of closing. Two reasons one if you find a buyer that's wants a two family it's not too late to sell like that and two you will save by not paying taxes on two units. I'm talking about the taxes you pay to the city. Three if you buy as a two family after create condos you will have to talk to your bank, I believe you will have to do what is called a partial release. Almost like a refi. Reason is they would want to know what your second unit is valued at. With out the value they would not know what your new mortgage needs to be and how much money you get to keep from the flip. I hope this helps!