Real Estate for Rent from Condo Conversions in Colorado
Real estate for rent from condo conversions has been growing in number in Colorado and in other states as the inventory of unsold condo units keeps growing.
During the boom in 2005 and 2006, developers across the country built condos to respond to the demand for resort-style and high-rise units that support the carefree lifestyle.
But when the real estate market collapsed, the expected buyers disappeared, leaving a lot of condo complexes unsold, abandoned and foreclosed. Now lenders and investors are trying to recoup their investments by offering condo units as rental apartments.
In Aspen, 89 units of the 111-unit Esperanza Village condo complex are now being offered as rental apartments at very affordable rents. Incentives such as one-month free rent and move-in deposit are also provided.
According to MIMG XV Associates, the new owner of the condo building, the original owners paid $6 million to buy the building and spent another $1 million for improvements. They planned to sell the units to the working poor in the area, but eventually, only 21 units were sold at prices from $60,000 to $90,000.
At a price of $32,222 per unit, the new owners said they can weather the downturn by temporarily operating the units as real estate for rent. They also are helped by a lender who saw the potential of the property because of the low acquisition price.
Another condo building in Colorado Springs now operating as a rental complex is the Cheyenne Creek building. The building was acquired in 2005 for $8.5 million by Resort Living LLC, which planned to sell the units in the mid-$100,000 range. But Resort sold only 20 percent of the units. Eventually, 80 percent of the condos were rented out as apartments.
According to broker Becky Gloriod, who worked as a broker for Cheyenne Creek during the boom, potential condo buyers today are having difficulties in getting loans. Fannie Mae has not been approving loans for condos even if borrowers commit to make a down payment of 60 percent.
Marsha Kromer, an officer of First Mortgage Co., also said that residents of Colorado Springs are not really enthusiastic about condos. She said that people are more interested in single family houses and in townhomes.
With the newly-released statement from Fannie Mae and Freddie Mac that they are no longer financing condo purchases if pre-sold units do not make up at least 70 percent of total units, it is expected that more unsold condo units will be offered as real estate for rent.
