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Join Date: Jun 2005
Location: Olympia, WA
Bikes: Trek 600 series touring bike, Trek 800 hybrid, Bianchi
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We live in conversion in Seattle.
Rentals are lucrative, but, also risky. In addition to possible damage to the unit from neglect, drug dealing/making, etc, there's no guarantee that you'll have renters.
For a while in Seattle, when interest rates were at their lowest, everyone was trying to buy houses. The result was, for a short while, there was a rental glut---renters had their choice and could negotiate prices.
That's when these conversions started. Dump properties that don't have full renters. [edit:] And, dump properties that have full renters. The conversions are really just cheap (-ly done) make-overs. Nothing structurally significant is usually done. It's all about fixing up appearances. Put in granite counter tops and stainless appliances, you can mark up the price significantly.
Let's say the apartment/condo sells at $300K (typical going price for a 1-2 bedroom, 1 bath conversion), and there are 10-15 units in the building. That's a lot of cash at the end of the day, even after subtracting the costs for the remodel.
Why not new? In Seattle, when we were looking, the new condos were muuuch more expensive, even though on average they had less square feet. And, there's no guarantee that new is better. In fact, older is better many times---it's proven itself over a bit of time. There's more than one story of a contractor declaring "bankruptcy" and can't be sued for damages of bad workmanship, when you know the funds from the sale are somewhere in the Bahamas.
Houses? Houses in Seattle proper are going for $550-$700K.
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