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Would you consider an apartment conversion?

{ 24 comments }

When I first moved to the Portland Metro in 1996, I found an apartment in Beaverton, a nearby suburb. After a year, I made some friends and moved to the trendy Northwest area of Portland with a roommate. We got a 2 bedroom apartment in a great old building call the Envoy. The Envoy was built in the 1920s and is listed on the National Register of Historic Places. I loved living in this area. There are a bunch of little shops, restaurants, and bars nearby. This part of town is always lively and there are a lot of fun things to do. The Envoy is also right next to Washington park and I could go for a hike whenever I need to get away. We paid $850/month for the two bedroom apartment and it was a great deal.

consider an apartment conversion

I love this pink building.

During the real estate boom, apartment conversions were quite common and the Envoy was one of them. I went by to take a look at my old apartment because I would love to live there again, but I think the price was around $500,000. That’s a bit too expensive for a 2 bedroom condo. The price came down a little bit over the last few years, but the awesome penthouse is still very expensive at $3,475,000. The top floor used to have two apartments, but the buyer joined them together to create one big penthouse. If I ever win the lotto, I’ll pick this place up for sure. This is my Portland dream home. For those of you who live in the Northwest, this was Fred Meyer’s old home a long time ago.

I think apartment conversion is a great idea. Here are just a few things that I like about it.

  • A historical building can be saved by a conversion instead of being torn down.
  • It’s more environmental friendly because the building can be recycled for another purpose. Quite a few downtown warehouses were converted to condos in Portland over the last 15 years.
  • The price is usually lower than a comparable condo in a brand new building.
  • The city sometime gives incentive to the buyers in the form of property tax freeze (to the pre-conversion property value.) This will encourage the buyers to move into a newly repurposed area. The tax freezes I’ve seen usually expire in 10 or 15 years.

However, there are some negatives as well.

  • Old buildings usually have outdated floor plans. In the old days, people don’t want to see the kitchen so it is usually hidden away. Now, we like to cook and still interact with the family. The old bedrooms are usually bigger than bedrooms in new constructions, and aren’t the  most efficient use of space. The bathrooms in old buildings are usually more cramped too.
  • Outdated building material such as lead paint can be a concern. I’m not optimistic about how the Envoy would do in a big earthquake either.
  • A converted building may have older plumbing, elevator, or other longer life structures. You will need to talk to the HOA and read all the fine print to be sure there won’t be any surprises.
  • A building conversion can take a long time and the market condition could change by the time a building is finished. The builder would have used an estimator to figure out their cost and set the for sale price accordingly. However, the big real estate market downturn caused a panic and many condos in many buildings remained unsold for a long time or reverted to apartments.

All in all, I’m a big fan of the process and if the price is right, I would consider it. What about you?

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{ 24 comments… add one }
  • Kurt @ Money Counselor August 2, 2012, 10:14 am

    You read my mind with the earthquake negative. Our area is subject to the same 9.0+ mega-thrust earthquake risk as Portland, so I think about this a lot and how the various buildings in our community are likely to be affected. It’s going to be ugly. Other than that, I think conversions are great, for all the reasons you note, but I agree a bit more due diligence is probably in order compared to buying in a new building. And who knows–many new buildings may not fare so well in The Big One either! I’m not sure we’ve achieved the engineering knowhow yet to construct large buildings sure to withstand the biggest temblors.

    • retirebyforty August 2, 2012, 10:41 pm

      I hope that mega earthquake is delayed for another 50 years. We’ll have tons of damage when that earthquake hit.
      I think the new building should do much better in an earthquake because of better material and building code, right?

  • It seems like a pretty cool idea. I don’t live in a big metro area though so there wont be any opportunities like this where I live. There are a ton of beach condo s though!

    • retirebyforty August 2, 2012, 10:42 pm

      The beach condos in Oregon are pretty new. There are not a lot of them here.

  • SavvyFinancialLatina August 2, 2012, 10:58 am

    I think conversions are great! It adds history to our nation! Which in some places we really lack ;/

    I would consider buying/renting a historic condo if it had a great feel and association. Everyone talks about how bad living in an apartment is compared to a house, but I rather enjoy it. I don’t need all the space houses give you.

    • retirebyforty August 2, 2012, 10:43 pm

      That’s great. I like living in a condo more than a house too. There are too many things to do in a house and we are already way too busy. 🙂

  • Bill Clifford August 2, 2012, 11:45 am

    I think that conversions of these old historic buildings are great. I live in one myself here in Los Angeles and I love it. Our building was incredibly well done and the quality of the construction is excellent. We have not had any HOA assessments or problems otherwise.

    However, I would not buy in a building that had very recently been converted and had not been occupied by borrowers for at least a year or two. I’ve heard some horror stories about some of the converted buildings here in Los Angeles that were poorly done and the people who bought early were the ones who paid the price. If the building conversion is not well done problems are going to arise and that typically will lead to HOA assessments for repairs to the building. A friend of mine bought a place and got 3 separate $5,000 assessments in one year, as a result he lost the unit to foreclosure. Another issue that can come up is that banks will not lend on some of these conversions if they have problems.

    My advice is to do a ton of research on the building and the HOA to ensure that it is not a “problem building”. Also, if you want to be very thorough you can have a real estate attorney review the HOA bylaws to determine if there are any potential pitfalls.

    Bill Clifford
    Open Mortgage
    http://www.OpenMortgageLA.com
    NMLS 289148

    • retirebyforty August 2, 2012, 10:45 pm

      That’s a good tip. I’ll make sure to look at the occupation history.

  • Kathleen @ Frugal Portland August 2, 2012, 1:21 pm

    Love that building, and I’d absolutely consider it as well — in my neighborhood there’s an old Deco church that was converted to condos, that place looks so neat!

    • retirebyforty August 2, 2012, 10:47 pm

      The church sounds interesting. I would love to live in a converted fire station or something like that. 🙂

  • DaveL August 2, 2012, 3:45 pm

    That penthouse looks sweet! I like the idea of the conversion and preserving the historic building. It makes the surrounding local community happy and sets better with the city. My only concern like you said is all the fine print with safety and construction codes. In an older building I could picture this being a huge obstacle to overcome. You would just have to do your homework and way the costs.

    • retirebyforty August 2, 2012, 10:48 pm

      You are right. Most resident like a conversion much more than a new building. The building help retain the character of the neighborhood.

  • krantcents August 2, 2012, 4:26 pm

    In Los Angeles, the only historical building conversions are in the center of town in neighborhoods that are turning. Personally, I would not want to walk there at night. My son lived in a converted building loft for cople years near downtown. It is really nice, but the area did not catch up. It sounds like The Envoy is not in that situation.

    • retirebyforty August 2, 2012, 10:50 pm

      Really? I heard of some conversions in Chinatown. If the area is not safe, then it can be a tough sell.
      The Envoy is in a really nice area. That area used to be the artsy up and coming area in the 80s, but now it is very nice.

  • Martin August 2, 2012, 6:37 pm

    My friend asked me why my condo was in a building called the “Printing Factory.” Well the answer is simple you see. The building used to be a printing factory lol!

    When I first bought the unit I was young and clueless (still sort of am!). I asked the agent, where the bond would be?

    “Right here,” was the response. The printing factory was gutted and turned into condos.

    This is very common in Toronto. There’s a church that’s a condo now. That one is just way too creepy for me. Imagine bringing dates back?

    • retirebyforty August 2, 2012, 10:52 pm

      That’s pretty cool. Is your unit a loft? Most of the factories and warehouses are turned into lofts, correct? I don’t like the one big room floor plan. 🙂
      You’re right about the church. It would be kind of weird.

  • Manette @ Barbara Friedberg Personal Finance August 2, 2012, 11:09 pm

    Living in a converted building never occurred to my mind. But I do have a friend who lived in one and I hated going to her place because it felt very spooky… There was also a time my mom thought of converting our family house when my siblings and I started moving out. She wanted to divide the house and rent it out so that she will have an extra income on top of the social security benefit she receives; however, we all rejected the idea because we wanted to preserve the house. Instead, we bought a one-bedroom house for her and put the family house for rent.

    • retirebyforty August 3, 2012, 3:38 pm

      Sorry to hear about your spooky experience. 🙂
      How is renting the family house out working? It’s great that you were able to help your mom out.

  • Will @ HTB August 3, 2012, 8:35 am

    Yes, I would consider an apartment conversion. I think they’re pretty cool, especially the brick ones I’ve seen in San Francisco. I think they all have character.

    • retirebyforty August 3, 2012, 3:44 pm

      For some reason, I’m thinking the brick buildings do not fare well in an earthquake. I’m not sure if that’s true or not though.

  • Budget and the Beach August 3, 2012, 8:39 am

    I love seeing those shows like house hunters where creative people who buy places like this, completely gut it and update it with a modern look, combining the charm of the old school with the conveniences of the new.

    • retirebyforty August 3, 2012, 3:45 pm

      Most big buildings require intensive capital to renovate and probably only a few companies are willing to do that. I’ll see if our library has house hunters. 🙂

  • Little House August 3, 2012, 10:37 am

    There were a few conversions near me, but they weren’t very old buildings. Instead, they turned mid-’80’s apartments into condo’s that sold for the $400’s and up. The other day I drove by this same place and they are now advertising selling the units for the $190’s and up. Big drop in price. I feel badly for the people who purchased these at the peak of the market.

    • retirebyforty August 3, 2012, 3:49 pm

      Yeah, anyone who purchased anything at the top of the market is still regretting it. Hopefully the housing market will recover at some point.

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