Tips for Buyers Seeking to Purchase a Home as Part of a Condo Conversion
By Louise Phillips Forbes, Brown Harris Stevens
For New York City buyers on the hunt for a new home, there are three kinds of properties – resale co-ops and condos, new construction, and the now rare conversion of iconic rental buildings to form a community of new owners.
Until adoption of the Housing Stability and Tenant Protection Act in June 2019, the conversion of rental buildings to condominium ownership occurred at a steady pace. These conversions introduced newly capitalized inventory to the market, averaging upwards of 1,500 individual units year-after-year. Today, 393 West End Avenue represents one of the last opportunities for New Yorkers to purchase a uniquely developed home as part of a luxury rental building, to a new condo community.
Buying in New York City, especially as part of a conversion, can seem daunting. Here are four tips to help buyers successfully navigate this nuanced sector of the market.
Dig into the details. The offering plan is the playbook for the building and will outline operating budgets, capital improvements, as well as the staffing and service offerings that will all contribute to the owners’ day-to-day enjoyment and experience. In a conversion, it is important to specifically understand the sponsor’s mandated contributions to the building’s reserve fund in order to glean a sense of potential assessments that can be passed on to owners for future work.
Timing is everything. In a market defined by limited inventory, a conversion will provide buyers with access to a number of new units, some that are not yet on the market.
Know your dance partner. The skills and expertise needed to work within the constraints of an existing building vastly differ from ground-up construction. Review the credentials of the sponsor, the architect, the engineers, the construction team, and the brokers to ensure that they have the depth of experience necessary to update the infrastructure and reimagine the common areas and private residences.
Relationships matter. Securing financing for a conversion can be challenging. To this end, Sponsors often establish relationships with banks in an effort to pre-approve the building and work closely with buyers within established parameters to meet their individual financing needs within, during, and through a fickle lending environment.
Louise Phillips Forbes is a top producing agent at Brown Harris Stevens and a 33-year real estate insider with career sales totals exceeding $5.5 billion. She has led the conversion of more than 30 buildings, most recently 393 West End Avenue.
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