Investors fix up apartments, sell as condos
Ronda Davis’ apartment is about to become a condominium.
Now she’ll just have to decide whether to buy in.
“It’s an exciting notion,” said Davis, who works out of her apartment at Eddingham Place Apartments, her rental home for the past four years. “If I think about it objectively, it’s a good thing: There might be more affordable housing out there.”
That’s just what Glen Sohl, Sean Williams and others are counting on these days, as they are working to renovate, market or otherwise transform aging apartment complexes into market-viable condos.
Eddingham Place, a student-oriented rental complex along Naismith Drive south of 23rd Street, just hit the market last week with condos for sale. Realtors were invited for an open house Thursday, giving them a chance to see the first of dozens of units that will be hitting the market in the coming months, as overhauls of vacant apartments are finished and others are undertaken as leases expire.
Not all units will be up for sale, at least not right away, said Sohl, a Realtor who is marketing the property for Eddingham’s owner. But with two-bedroom units listed for sale at $73,000, Sohl is confident that the new condos will enjoy plenty of demand.
New townhomes in town can’t be purchased for any less than $125,000, he said, and entry-level single-family homes are going for even more, with the average sales price for a home approaching $200,000.
The apartments-turned-condos, Sohl said, will help inject more affordability back into the Lawrence market.
“It’s being done all over the United States in different markets,” Sohl said. “People can own for slightly more than what it costs to rent – but after tax deductions, it’s less than the cost of rent. And then there’s the appreciation in property values. :
“It makes perfect sense.”
Eddingham may be the latest entry in the condos market, but it is not alone.
College Hill and Westbrook condominiums both have had units bought and sold for decades, and their popularity has picked up in recent years as other housing prices have escalated, said Tim Keller, president of Keller & Associates, a Lawrence-based real estate appraisal firm.
New-to-the-market Hobbs Taylor Lofts, in downtown Lawrence, has established the standard for high-end condos in town, while Bella Sera is being built along the north side of Bob Billings Parkway at Inverness Drive.
But repurposing former rental apartments is a relatively fresh approach for Lawrence, although not an unexpected one, Keller said. With the vacancy rate in the city’s more than 8,500 apartments holding steady around 7.4 percent – a level that climbs past 11 percent for apartments built before 1980 – perhaps it’s no wonder that property owners are turning toward the condo market.
Mortgage interest rates are still low enough to attract potential buyers, Keller said, and boosting offerings for less than $100,000 can serve both buyers and sellers well.
“It’s catching on,” Keller said. “It’s an alternative for the investor to consider : and it offers another type of housing for people. And that’s a good thing.”
Keller still considers the condos market to be a relatively small slice of the city’s residential market, but he acknowledges that it is growing.
Colorado Point already is on the market, with two-bedroom units listed for $69,000, plus $80 a month for homeowner’s association dues that cover some common expenses, including property insurance.
Condos on the Curve?
Another project, at 31st Street and Kasold Drive, is about to take shape. Randy Barnes, John Evans, Jason Todd and Sean Williams are preparing to close on the purchase of Kasold on the Curve Townhomes, a nine-building, 27-unit development of triplexes built in the 1980s.
The project – to be called “Kasold Condos on the Curve,” or some variation thereof – calls for revamping all of the units as their leases expire. Each overhaul should take less than a month, putting units up for sale at prices ranging from $85,000 to $105,000.
While the complex has three rentals that are vacant, Williams is confident that remodeled and up-for-sale units will be snapped up by parents buying homes for their children attending Kansas University, or empty-nesters looking for maintenance-free living, or young families just wanting to enter the home-ownership market and build some equity.
All while turning a solid return for the investors who see affordable housing as an underserved market sector.
“We saw an opportunity,” said Williams, who is a Realtor. “It’s a potential win-win for everybody.”
Davis, of Eddingham apartments, isn’t sold on the idea just yet. She’s not sure whether buying her apartment would be worth $73,000, especially given that it “needs $10,000 worth of work.” And there’s always a concern that a single buyer could snap up most or all of the available units, then rent them to questionable tenants and dominate decisions in the homeowner’s association.
At least she has something new to consider.
“It’s kind of exciting – the possibility,” Davis said. “But I need to know more.”