Converting
With the condo market dropping significantly in several areas, including Las Vegas, many developers have decided to convert their luxury condo projects into apartment complexes — at least for the time being. This way, they rationalize, they can raise some revenues from rents as they wait for the condo surplus to shrink.
It’s a good idea, particularly if your investors are looking for results, but as many experts point out, it’s not a sure bet. Analysts point out that rents may start dropping if too many condos are converted into apartments too quickly. Additionally, given the condition of the market, as a developer you may not being able recoup your costs and have to redesign floor plans yet again.
According to the National Association of Realtors, condominium sales have fallen further than those of single-family properties on a national basis. From November 2005 to November 2006, there has been a 13.6 percent drop. The national median price for a condo was $224,600 in November 2006, unchanged from November 2005.