Rendering by ARCADIA Design
A report published a few weeks ago that looked at the DC zip codes offering the greatest return on investment (ROI) for home flippers omitted a type of renovation prevalent in DC, specifically conversions of single-family homes into multiple condominium units.
To get a sense for the developer costs and ROI for these projects that have sprouted up on blocks all over DC, UrbanTurf spoke with a real estate consultant and a small-scale developer both of whom provided us with itemized expenses and profits for small condo projects they have been associated with.
“North of Adams Morgan, Mount Pleasant, Columbia Heights, Howard [University] area, Eckington, all of these areas are decently safe places to invest for developers that are looking to do a condo conversion and that’s where we see most of our acquisitions,” Saman Zomorodi, a Condominium Conversion Associate at Standard Title Group and consultant who helps structure financing for real estate developers, explained.
As the table below shows, once the actual costs that go into renovating and retrofitting a single-family home to sell it as two condos are calculated, developers in DC can enjoy healthy returns in zip codes that seemed less impressive for flipping in the report mentioned above, which noted that the highest ROI in DC came from zip codes East of the River. The table compares 14-month conversions in Adams Morgan and Columbia Heights, using data provided by Zomorodi and a developer who specializes in these sort of conversions and wishes to remain anonymous.
Costs and returns for single-family homes converted into two condo units
As the above data illustrates, both projects delivered healthy profits in excess of $220,000, before taxes, while also highlighting the variety of costs that developers incur. And while these developments were quite successful, the initial acquisition costs were low, which is becoming more and more rare in a city where there is so much competition and demand. Another thing to consider is that neither project was plagued by variables that can quickly eat into the profits for developments of this scale, such as unexpected construction costs or not achieving the original list price for the condos.
This article originally published at http://dc.urbanturf.com/articles/blog/the_true_cost_and_profits_of_a_condo_conversion_in_dc/12850
Most Popular... This Week • Last 30 Days • Ever
UrbanTurf has compiled virtual looks at large new developments around the DC region.... read »
The seven-bedroom home hit the market on Friday and was under contract by Sunday.... read »
This year will likely go down as the year that prices for houses in DC reached new he... read »
Dubbed OZMA, the 13-story project will include roughly 7,900 square feet of ground fl... read »
A previous proposal for the site shared last year would have delivered 83 units and s... read »
The preferred mortgage product among most home buyers is the fixed-rate mortgage. How... read »
STAY DC provides rental aid and utility payment grants to at-risk District residents ... read »
The planned 8-unit development would be located on K Street right along the Potomac R... read »
Landmark Theatres is in the final stages of negotiations that would have it operating... read »
The 12,000 square foot replica of 1600 Pennsylvania Avenue went under contract last w... read »
With this weekend's DC houseboat tour a day away, UrbanTurf thought it only fitting t... read »
President Obama travels to Denver this morning to sign the stimulus bill that has bee... read »
In this week's installment of Ask An Agent, a reader wonders if there is a rule for h... read »
As The Wharf prepares to begin construction, DC's houseboat community heads to its ne... read »
In this week's installment of Ask An Agent, a reader asks a fairly common question th... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!
Intro guides for first-time home buyers
Awesome and unusual real estate from across the DC Metro