Thursday, August 05, 2004

Developer says do the math and buy when you find a valuable unit


Mark Weiss lives what he preaches.

When it came time for this Chicago developer turned author to buy his first home, he chose a condo.

Now, even after 15 years of working as a real estate developer, landlord, investor, auctioneer and builder, Weiss still believes that condos are good investments for those looking to free themselves from the renting world.

The opportunity to own a home, even for young first-timers, is everywhere, Weiss writes in his book "Condos, Co-Ops & Townhouses" (Dearborn Trade Publishing, $18.95). "Home ownership may not be as free as the air but, like oxygen, it's out there so breathe it in."

Weiss shared some other insights and some tips to keep in mind when considering an apartment converted to a condo:

Do the math: If you are renting a unit and the price to buy, including fees, is less than your rent or even if it is a few hundred dollars more but still within your budget, buy it, Weiss said. The value of the unit will only appreciate.

In addition, when buying, Weiss says to always check the price per square foot compared to other properties in the area. Paying above the average may not be a good move.

Take a look and get it in writing:Most condo conversions will offer models and written details about what will take place to upgrade the unit. Weiss recommends reviewing the details and getting a copy of the document. He says buyers should not get carried away with the aesthetics. Make sure the work being done to upgrade the property is quality along with the roof, walls, siding, floor, heating systems, plumbing, appliances, walkways and elevators. All of these impact the value of the property.

Also, take pictures of the before and after to assure that you got what you paid for. If you have a real estate agent, have him or her agent do that work.

Don't wait it out: In any condo conversion, all units will undergo some type of renovation. Weiss recommends that you have a temporary place to stay while the work is being done. Renovation could involve everything from sanding floors and tearing out carpet to painting and some minor construction work. All of that means noise, dust and confusion. "It's a mess," Weiss says. "It's not worth trying to stay there if you can find some other place to be."

For those looking to buy into a conversion, Weiss says to check the delivery date. Sometimes developers will say the unit will be ready on a particular day and then hit a delay. If possible, ask the developer to sign a document in which they'll agree to pay a penalty for each day the unit is not finished.

Check it out: The one stunner for condo buyers can be association fees. Sometimes developers will entice buyers into the complex by advertising low fees. But once the complex is filled and an association takes over, the prices can skyrocket to reflect the real market value of the combined properties.

Weiss suggested doing some homework and checking other similar complexes to see what their fees are.

Home first, investment second: Although real estate is an investment, Weiss says he discourages people from buying a condo on that premise alone.

"It is your house and you should treat it that way," he says. "You shouldn't buy a condo thinking you can try and time the market. It won't work."

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