Cooperative Conversions-good Idea?
In So. CA - not quite familiar with co-op's like in the east coast.
Are these possible good deals in So. Cal market? I've heard that at least in San Francisco, these are starting to get developed (just hearsay, I'm not a major player in this arena). What are the nuts and bolts (criteria) of acquiring an apartment unit (at least 8-10 units) and possibly turning them to co-ops? cash flow, issuing shares, non-refun down payments (like lease option)
Can you really turn a marginal (less than desirable cash flow) income property and make profit turning them to a co-op and getting initial cash, will a lease-option be an easier alternative.
Lastly, if I was the buyer of the income property, do I have to disclose to the Seller what I intend to do? and if he/she finds out during escrow, can they legally back out?
Thanks.
Outside of the east coast the more common way to do this is to do a condo conversion. They are much easier to get financed.
No, buyers do not have to disclose, only sellers have disclosure requirements.
Condo conversion are becoming a really big thing in San Diego. It takes about two years to complete the process, so you will need to be able to handle the holding costs.
[addsig]
I like Co-op. Always have. I have only done Condo's out here in LaLa land . I listened to O'Melveny and Myers and they being the biggy in Legal Circles I went with the rest who were paying their bills.
But always in the back of my head was the Co-op. I think in the really long run that is the way to go. It seems to fit our system of economics better. More fun to play with stocks. But then the real test is in the Direction and Management of the properties. I have seen both good and bad, in the Hollywood area, especialy. Maybe we are just flakier peoples. But that is my experience.
Right now Permit Wise and Stuff it is a bit frustrating at the Building Department. If you are going to play this game stop a minute and examine the existing players. Check out Snyder and the other biggies and see who they are using for Permits and Representation and then latch on and ride the back of their Charriot.
My Grandfather used to say "Pioneers get killed so be a Carpetbagger and come in second and collect."
The Marines used to say. "There are no Officers at the point. The medals are given out afterwards, so be there."
In the RAF we used to say, "Tallyho the Fox, but approach him from the rear."
Lucius says. "Go proudly into battle and fight the good fight. But base it all on planning, finite and always tight!"
from n. ca and have not heard on co-ops.
There are laws ib the building codos up here to convert MF in condos.
The MF are are still priced too high for these to make alot of sense, esp since they are in the lower price end part of town. so you can't get as much on the much end.
Plus, given all the code upgrades the conversion cost is pretty high.
The other this that's popular in SF is multi-unit victorian / edwardians being converted to condos.