September 2010

Data.gov – A Cool Site With Lots Of Great Info

http://www.Data.gov I just found this site and wanted to share it.  It has a ton of info and reports.  If you have a project or just an “inquiring mind”, this is sure to be a hit.  Check it out and get the data you need.

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Buying a Condo Conversion

By Aaron Gordon

Never question the ingenuity of the real estate developer.

Close to 20 years ago, two of my best buddies and I decided to pool our resources after college and get an apartment of our own.

The three of us were barely able to afford a 3 bedroom apartment that was about 10 years old at the time. We paid about $500/mo. in rent. To this day, I am not sure how we could afford that apartment.

The apartment was a dump. The flooring, the kitchen and, especially, the bathrooms were so bad, that my father walked in one day with a horrified look of disgust on his face, and refused to stay. However, that was what my buddies and I called home.

Today, nearly 30 years later I am doing loans for people buying units in that same apartment complex. Today, it’s a condo conversion!!

The entire complex has been remodeled, and the units are going for nearly $175,000 a unit.

Pure genius!

You all know about condo conversions and how incredibly hot they are in the market. Low interest rates have driven new home sales thru the roof and condos are no exception.

First time home buyers are flocking to get in any way they can. This has actually crippled the apartment business and is driving the biggest condominium conversion boom in 20 years.

Over 12,000 apartment units in Las Vegas are currently mapped for condo conversions. Condo developers are paying a premium to acquire and transform old apartment complexes into condos and they are doing this all across the country, especially Las Vegas and South Florida.

The developers typically search for apartment-to-condo conversions in desirable locations where they won’t directly compete with affordable entry- level homes.

They want to offer an affordable alternative to pricier single-family homes or to costlier condos in new developments.

In many cases, condo conversions provide the perfect entry-level opportunity for renters to become home owners, allowing these new property owners to build equity and realize their homeownership dream.

Transforming apartment buildings into condominiums is quicker and less risky than construction from the ground up.

Land prices have gone up so high that many developers cannot afford to build entry-level housing, so this is a great option. Home buyers then benefit because converted units are usually more affordable than new ones, and many are in choice locations. You can find some of these units advertised locally for as low as the $90′s.

Conversion developers say they can buy something for one-third of the cost that it would take to buy the vacant land and build something on it.

The beauty for the developer is that the condo conversion isn’t going to be selling for one-third of what it would cost brand new. It’s more like 75%-85% of it.

The developers usually do a pretty nice job improving the property and the units. Upgrades are usually made to the property’s exterior and common areas. Then they add on the sizzle. Granite counter tops, upgraded cabinetry and fixtures, and wood floors are often added to individual units. The upgrades are built into the condo prices.

Once the developer acquires an apartment complex, they generally convince about 10-15% of the existing renters to stay by buying a unit. They will often offer these people discounts before they ever even market to the general public.

The obvious key to selling these units to your clients is to convince buyers that they are better off owning versus renting or to get your more timid investors to jump in with less financial risk.

People have a desire to own a home. There are very few who want to rent and low interest rates have provided this opportunity.

Condo conversions create more affordable housing in areas when the price for a single-family home skyrockets like we have seen throughout the country. A single family home in Las Vegas, where I live, is averaging around $300,000. That is simply not affordable for your average first-time home buyer.

Speculators and investors make up 30-50% of all condo conversion buyers. They buy these units, intending to sell them at a higher price in a short term.

Rising interest rates historically have slowed conversion activity. This slows down the appreciation as well. It’s difficult to convince someone to pay $1200 per month on a mortgage for a 1000 sq. ft condo. However, get it under $1000 and you will find buyers.

Before you invest in one of these units and plan on renting it out, or you plan to buy one to live in, you must know a few things.

Condo conversions are marketed to the very same people who rent apartments. Thirty to 50% of all condo conversion buyers are investors and speculators.

When they go to rent their units, they are competing for the very same market as the developer of the project. Why rent when you can buy? Why rent from you either?

Once cheap mortgages vanish, and rates have been rising recently as you all know, condo conversions will become riskier. When home sales slow, converters may find it harder to sell their condos.

Once 30 year interest rates hit 7% or 8%, experts say, condo conversions will cool. Today, we are at around 6.25%. The good news is condo conversions are almost the last bastion of truly affordable housing in many areas.

Here are some things to keep in mind…

Many people buying condo conversions don’t realize that the property they are buying is different from a newly constructed unit. This means the financial exposure for repairs and replacements can be much higher.

New condominiums, built from the ground up, are constructed with the building materials of today and have to conform to today’s more strict building codes.

The condition of converted condominiums can vary. An older apartment complex converted to condos could have wear and tear and may have structural faults unknown at closing. These problems can become a real hinderance later on.

Newer apartments that have been converted to condominiums in the past few years were probably constructed under the latest building codes and have new building components, mechanical systems and interior finishes. These are a safer bet and you will want to find out the year the original structure was built.

Many older buildings have been converted as well. Some converters gut an apartment building, taking it down to its “shell,” and then rebuild it, installing new plumbing, roof and mechanical systems.

Other developers simply do “cosmetic rehabs,” leaving the building components as is and merely sprucing up the property to make units more marketable.

Buyers beware. Are you buying a fully renovated building that was taken down to the shell, or are you buying a building that someone just slapped some paint on and put in a few new windows?

What about problems to the complex? Although most developers do a terrific job in converting, what if the roof needs to be repaired after a few years? Does the association have enough reserves to cover it? Many people believe condo conversion owners can expect special assessments quicker than new condo buyers.

You do have some safeguards. As a lender for condo conversion buyers, we often require an engineer’s report from the developer before we close the loan. You have a right to this document as well.

It tells you what was done to the building and the sales office can give you a copy of this if you ask.

Here are some other things you should know before buying a condo conversion:

They usually have restrictive covenants. Every condominium project has rules and restrictions that govern what unit owners can do. If you own a pet, make sure your building is pet-friendly. Do you even get a covered parking space?

Are you buying the unit as an investor to rent out? You will want to make sure the building allows rentals and the minimum term required.

If speculators cannot resell their units they will rent them out too. If there are many renters, that can create problems with condo owners in the same building and lead to maintenance issues.

Renters tend to care far less about their homes than do the home’s owner. Too many renters can destroy the complex and it’s value.

Speculators buy as much as 70% of some condominium projects. You may be moving into a building that is nearly vacant. That may not be what you had hoped for.

Once a condominium project has more than 30% of its owners that use it as a second home or as an investment property, the condos all become “non-warrantable.”

Non-warrantable condos mean the project is not insured by Fannie Mae. This means a different kind of loan for the buyer of your condo. Many banks do not loan on non-warrantable condos. We offer non-warrantable condo loans. Even though they are very competitive, even offering 100% financing, the loan programs are not quite the same as they are on a warrantable condo.

Here is a time and problem saving tip:

When you are selling a condo, of any kind, you want to make sure you or your agent contacts the Homeowner’s Association, early in the process, and asks them what percentage of the project is non-owner occupied. If it’s over 30%, you want to communicate this immediately to your buyer. He has to make sure his lender can do the loan or he may have to change lenders. It is best if you know this early.

Many condo conversions are considered non-warrantable.

The bottom line is condo conversions offer affordable housing in many areas where the first-time homebuyer and the real estate investor, who wants to take on a little less financial risk, are starting to be turned away. However, as a buyer you want to be very cautious and ask questions about the building’s history and residential make-up.

Aaron Gordon is a top-producing Senior Mortgage Consultant with Realty Mortgage Corporation in Las Vegas, NV. His monthly newsletter currently goes out to over 10,000 real estate agents and other professionals in the Las Vegas area. He helps over 200 families each year with their mortgage needs in many states. He can be reached by email at aarong@realtymortgage.info or you can see more newsletters at http://www.aarongordon.net

Article Source: http://EzineArticles.com/?expert=Aaron_Gordon
http://EzineArticles.com/?Buying-a-Condo-Conversion&id=518715

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Thinking of Buying a Condo Hotel? Here Are 20 Things You Need to Know!

By Joel Greene

1. What is a condo hotel or condotel?

Think of a condo hotel (also sometimes called a condotel or hotel condo) as buying a condominium, although one that is part of a four-star caliber hotel. Therefore, as an owner, when you are on vacation, you’ll get the benefit of more four-star services and amenities than you’d get in a typical condominium.

2. What types of services and amenities are found in condo hotels?

If you can imagine the niceties you’d find in an upscale hotel, then you can picture a condo hotel. Among the features are often resort-style pools, full-service spas, state-of-the-art fitness centers, fine dining restaurants, concierge services and room service.

In some locations, like Las Vegas, you’ll find condo hotels with their own casinos, retail areas, and entertainment venues. In places like Orlando, you’ll find condo hotels with their own water parks and convention facilities.

3. What is the difference between a condo hotel and a traditional condominium?

The big difference between a hotel and a condo hotel is that a hotel typically has one owner, either individual or corporate, but a condo hotel is sold off unit by unit. Therefore, a 300-room condo hotel could have as many as 300 unit owners.

4. Is it evident to hotel guests whether they’re staying in a condo hotel or a traditional hotel?

A hotel guest will likely never know that the hotel has multiple owners because the property is operated just like a traditional hotel and often under the management of a well-known hotel company like Hilton, Hyatt, Starwood, Trump or W. Also, each of the individual condo hotel units will look identical in design and décor to every other, just as they would in a traditional hotel.

5. Who typically buys condo hotels?

They’re primarily sold to people who want a vacation home but do not want to deal with the hassles typically associated with second home ownership such as maintaining the property or finding renters in the off season.

6. What is the demographic of the typical condo hotel buyer?

The spectrum of condo hotel buyers is pretty broad. There are families that want a second home in a vacation destination. There are baby boomers who are at or nearing retirement and want somewhere they can “winter.” There are also plenty of investors who purchase a condo hotel unit with little intention of ever using it; they’re in it for the potential appreciation of the real estate.

7. Can you live in a condo hotel?

Condo hotels are not typically offered as primary residences. In fact, many of them limit the unit owner’s usage of the condo hotel unit (typically 30-60 days per year) because the unit is expected and needed in the hotel’s nightly rental program where it can be offered to guests and generate revenue.

8. Who gets the money when your condo hotel is rented out?

The hotel management company splits the rental revenue with the individual condo hotel owner. While the exact percentages vary from property to property, the typical rental split is in the 50%-50% range.

9. Who finds hotel guests and then cleans and maintains the condo hotel units?

The hotel management company markets the property and books hotel guests. It also maintains the unit and ensures the smooth operation of all of the hotel’s services and amenities.

10. What are the advantages / disadvantages of purchasing a condotel over purchasing typical rental properties?

Advantages include:

· Hassle-free ownership; no landlord issues

· Rental revenue to offset some or maybe all ownership expenses

· A fantastic vacation home available for use whenever you want

· A real estate investment at a time when other investments may seem less attractive

· Strong likelihood of appreciation

· Pride of ownership –”I own a piece of a Trump”

Disadvantages include:

· Annual cash flow could be equal to or less than annual ownership costs

· Pets are usually not welcome.

· An owner’s condo hotel unit may be rented when the owner wants to it, so advance reservations are required to guarantee availability.

· The condo hotel unit is subject to the same dips in the market that affect all hotels in the competitive market set: hurricanes, terrorist threats, warm winters up north, price of gas, etc., all of which can affect a unit’s occupancy rate and the amount of revenue it generates.

11. Are condo hotel units difficult to finance?

Not at all, but they do take 20% down typically, whereas condos can be purchased with less cash down. It’s also important to make sure you use a mortgage broker who has had success in getting condo hotel financing deals done. Many banks still do not do them, but more and more are getting involved as condo hotels become more widely available.

12. How long have condo hotels been around and where are they located?

Condo hotels have been around for several decades, but the huge surge of four-star and five-star condo hotels that have been making their way across the country, started around year 2000 in the Miami area. The Miami-Fort Lauderdale area still has the most condo hotels, but areas like Orlando and Las Vegas are developing condo hotel properties at an even faster rate and will likely surpass South Florida soon. Other up-and-coming areas are places like the Bahamas, Panama, Dominican Republic, Mexico, Canada and Dubai.

13. How much do condo hotel units cost?

That’s like asking how much a car costs. There are different quality condo hotels. Some require greater amounts of money than others, obviously.

There are inexpensive condo hotels out there for as little as $100,000. These are typically found in properties that have converted their use from an existing hotel. They are hotel room-sized, lack kitchen facilities, luxury franchises, and other first-class amenities.

Then there are the four-star or greater properties that may start in the $300,000 to $400,000 range, but can go all the way up to $800,000 just for a studio unit. One- and two-bedroom units cost substantially more than a studio. Of course, the studios do come fully furnished and finished, and will be significantly larger in size than a typical hotel room, and may attract guests because of its name like St. Regis, Ritz or W.

14. What are typical maintenance costs?

On average about $1.00 to $1.50 per sq. ft., but the range can exceed $2.00 sq. ft. in the most luxurious properties.

15. Do you buy condo hotel units after they have been built, or can you purchase condo hotels in pre-construction?

Unless you are in a hurry to get started vacationing or you need to complete a 1031 exchange, it’s best to buy condo hotels in pre-construction as early as possible. That’s when prices are lowest and unit selection is greatest. You will likely wait two years or longer before closing on and taking possession of your condo hotel unit, but you will have locked in the price and will get the benefit of maximum appreciation.

16. Is there anything else investors should want to know about condotels?

There is more to buying this type of real estate than the old phrase, “location, location, location.” While most condo hotels are located in desirable resort and business area locations, what is most important is a good franchise with a strong reservation system.

Also, do not be fooled by an aggressive rental split. One way or the other, the developer of the property will have to staff, maintain and operate the hotel and its services like the restaurants, bars, spas and pools from his share of the proceeds. If he’s giving you a very favorable share of the rental, he’s also more likely to be charging you a higher monthly maintenance fee. Of course, this goes both ways. If the maintenance split that is offered is closer to 50-50, then your maintenance should be more reasonable too.

17. Any suggestions to investors in choosing which condo hotel to buy?

Get good advice. That means you don’t want to rely only on the pitch provided by an onsite salesperson at a condo hotel. You want to talk with a broker who specializes in condo hotels and who knows and understands the entire condo hotel market, not just the facts pertaining to a single property. He or she will listen to your wants and needs and then offer recommendations as to which properties best match your requirements. You’ll have an opportunity to comparison shop and consider the pros and cons of each available property.

A good broker can be the difference between your buying a condo hotel that will be problematic and not live up to your expectations or one that will provide you with years of great vacations, good annual revenue and a substantial profit when you sell.

18. Does it cost more to use a real estate broker to purchase a condo hotel than buying a unit on one’s own?

No. With new condo hotel properties, the prices are always set by the developer and are exactly the same whether you buy directly from an onsite salesperson at the property or using a broker.

The broker’s commission is always paid by the developer and is already built into the price regardless of whether an outside broker participates in the sale or not. Since a broker’s representation is free to buyers, it does make sense to enlist their aid and get the benefit of their advice before making a purchase.

19. How can prospective buyers find a good condo hotel broker?

Ask friends for broker recommendations or search online for “condo hotel broker.” Visit condo hotel broker websites and see if the information they provide seems comprehensive and unbiased. If their website seems to focus on selling homes or office space, and the condo hotel information appears to be an afterthought, steer clear. Your best bet is to work with a condo hotel broker who specializes.

20. How can buyers learn about new condo hotel properties coming on the market?

Condo hotel brokers can be good information sources as they often learn about properties prior to their release to the general public. Another option is for them to subscribe to a condo hotel newsletter such as the one we publish called Condo Hotel Property Alert. We offer it for free on our website http://www.CondoHotelCenter.com and it features a different condo hotel property coming on the market each edition.

Joel Greene is president of Condo Hotel Center which specializes in the sale of condo hotels around the U.S. and the world. His detailed website contains condo hotel property listings, photos and detailed information. Visit http://www.CondoHotelCenter.com and http://www.CondoHotelsDubai.com. Be sure to sign up for his Condo Hotel Property Alert newsletter to be notified when new condo hotels come on the market.

Article Source: http://EzineArticles.com/?expert=Joel_Greene
http://EzineArticles.com/?Thinking-of-Buying-a-Condo-Hotel?–Here-Are-20-Things-You-Need-to-Know!&id=262086

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