A home that's not a house Low interest rates have brought about a new species of living spaces: the rondo. It's a special name for a rental apartment converted into a condo. And, if you haven't noticed, they're everywhere.
With costs ranging from $130,000 to $210,000, these 700- to 1,300-square-foot domiciles are quickly becoming the home purchase of choice for today's young adult. "The conversions for the past 24 to 36 months has been on an increase, as have the number of new condos," said Rudolph Prinz, with the state of Florida's Office of Land Sales. "You can pretty much link it to low interest rates."
In Hillsborough and Pinellas counties, some 2,600 apartment units became condos in the past year. Experts predict this year's conversions to figure in at 3,000. People buy these smaller homes because they don't want the suburban lifestyle, but also can't afford to buy a larger house within the city center, according to Realtors. For developers, it's often cheaper to convert than to build new, said Rosalind Sedacca, with Audubon condos in Pinellas County's Feather Sound area.
"When a developer finds a community in a wonderful location, it really makes more sense to either convert and remodel or do a gut renovation and rebuild on the site," she said. The 307-unit place sits near the bay, just seconds from Interstate 275, a Publix, a hospital and the Carillon office park. Developer Ceebraid-Signal Corp is even installing elevators for the three-storied property. But that's nothing compared to the company's other rondo property, located in Tampa: Beachwalk. Located near Rocky Point, Beachwalk plans a rock-climbing wall, free golf lessons, virtual golf, a boardwalk over a nature preserve and a community wine cellar. Prices range from $140,000 to $190,000. The Fountains at Countryside in Clearwater, is also selling a complex amenities package that includes a butterfly garden. Atlantic American Realty is gutting every apartment and replacing the plumbing and air conditioning for homes ranging from $105,000 to $157,000.
The complex's construction includes sound-numbing firewalls between units, said Debra Koehler, president. "Others are just slapping on paint and carpet and they're not replacing the air conditioning unit," said Koehler. "You get an old apartment. We're trying to set ourselves above everybody else." When communities go rondo, developers must follow rules set by the Florida Statutes, including sending notice to current renters and allowing the renter to buy the unit at a regular market price. Structurally, there isn't much difference between a rondo and a condo. Hearing your neighbor's television set is due to construction quality, said Marc Rosenwasser, vice president of Meadow Wood Property Company, who manages 10 central Florida apartment complexes.
The rondo market blew up in 2003, said Rosenwasser, who oversaw the sale of La Plaza del Sol, which was converted into the Sienna Villas off Kennedy Boulevard in Tampa. "There are very few areas available for new construction ... the only possibilities are to buy apartments and convert them," he said. Villa Sonoma, near Tampa's International Plaza, doesn't offer golf lessons or wine cellars. The location and construction is enough. "We've sold 60 percent in just eight weeks," sales manager Michael Caggiano said.
- Adrienne P. Samuels can be reached at 727 445-4157 or at samuels@sptimes.com
when buying a condo conversion Before you plunge into the new world of rondos, consider these: - How much is the monthly maintenance fee? What does the fee cover? - Are there any penalties for re-selling earlier than two years? - Will the homeowner's association allow you to rent out your new home? - What amenities are available, and when are they available? - Is it possible to add soundproofing to the walls and ceiling, if not already added? - What kind of insulation is being placed in the roof? (R-18 and higher is pretty good. Anything less and, if you're on the top floor, you might lose all of your air conditioning out through the roof.) - Are there firewalls between each unit?
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The Strategy Behind Conversions
Developers figure out how much units will fetch and then determine how much they need to spend to improve the property and units. Upgrades are typically made to the property's exterior and common areas. Amenities such as granite counter tops and wood floors are often added to individual units, for example. The upgrades are built into the condo prices. Armed with that information, converters tabulate how much they can pay for a property and still generate desired returns.
“You only need to look at the end-user financing to determine how feasible a project is, and the capital for residential is extremely liquid,” says Kaplan. His office made $650 million in loans to condo converters in Florida last year, up from $200 million in 2001. “People don't want to rent, they want to own, and low interest rates have provided the opportunity.” Searing Sales in the Sunshine State
The velocity of condo sales, particularly in Florida, gives converters confidence that plenty of time exists before the market will turn. In fact, Florida developers have yet to find the top of the market. While converters continue to pay higher prices for properties, home buyers continue to spend more for condos, says John Goldsworthy, director of marketing for Equity Marketing Services in Miami, a firm that has handled the sales and marketing of 130 condominium developments since 1980. “I think apartment owners realize that we're nearing the top of the market right now and that it's the best time to sell,” he says. “A lot of them are putting their properties on the market unpriced and are having a 15-to-20 day call for bids. And converters are snapping them up left and right.”
to view a list of selected Condo Conversions
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Questions
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