(Editor’s Note: Please welcome Wendy Leung as the newest contributor to Rain City Guide. She is a real estate professional specializing in the Seattle Condo market. She has been running a very interesting condo blog for a few months now, and I thought we could all benefit from her knowledge on the condo market in Downtown Seattle. if you haven’t read her blog, definitely check out her post on Cars and Condos where she gives insight into the local condos by describing the type of car that they would be. Great stuff! You can always learn more about her at her website or by contacting her directly at 206-321-2493)
With an increasing number of apartment buildings converting into condos as well as a parade of new construction projects being unveiled every day, home buyers may be wondering how to think about these two property types.
At the end of the day, your Realtor should help you evaluate the options based on your goals, budget, needs, and circumstances. Furthermore, every property is unique and generalizing about conversions and new condos is a bit like saying one genre of restaurant will always offer better service than another. That said, there are some fairly consistent differences between the two property types. Here are some of the advantages for each.
Advantages of new condos
- Newer, nicer interiors and exteriors, often come with better amenities and more imaginative architectural designs.
- Better quality construction (at least as far as we know). Gone are the days when builders used leaky Synthetic stucco for every new project. The quality of construction has advanced these days and more and more builders are using hardy plank, a combination of brick veneer, vinyl, metal, concrete, steel and cement.
- Flexibility to customize the interior. Usually, the builder will offer you a variety of upgrades and style options to make the place match your personal style.
Advantages of conversions
- There are fewer surprises. What you see is what you get. The building has been around for a while so generally, if there are any issues with the building, it should already have happened. If the building has issues, you can usually get hold of the information about any issues much easier than a new condo to make a better informed decision.
- There is actual market data available for that building and even that unit to support the rental value for the building if you are purchasing it as an investment. There will also be more insight into peoples’ opinions of the building as opposed to speculation from the new condo sales center.
- Most of the time, conversions are cheaper than buying new construction. When you’re looking at ROI, this can be the biggest factor of all since 3 years from now, a new condo and an apartment conversion will both be older condos in the eyes of most buyers.
If you are not paying a really large premium for new construction (this is getting harder to do these days), it will probably resell for more than a conversion. However, a pricey new construction unit may have a higher absolute price appreciation but may not have a higher return on investment (than a value-priced conversion unit). At the end of the day from an investment point of view, it’s the rate of return on investment and not the absolute resale price growth that maximizes your profits.