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Condo Converters Stay in Multifamily Driver's Seat

CHICAGO-The median sales price per unit rises to $70,000 for multifamily properties, according to Marcus & Millichap's annual apartment report, but cash flow is expected to become a bigger factor in 2005.

By Mark Ruda | Updated on January 31, 2005

CHICAGO-Condominium converters helped push the median sales price per unit to $70,000 for multifamily properties, according to Marcus & Millichap’s annual apartment report, and the trend of switching rental units to for-sale properties is expected to continue. However, the brokerage firm advises investors entering the market to focus on location, and expect to hold their newly acquired properties for at least three years.

“Value appreciation was the driving factor for buyers in 2004, but there will be a shift back to cash flow as the primary motivator due to rising interest rates,” according to the Marcus & Millichap report. The firm mentions two suburban areas–Schaumburg and Hoffman Estates in the northwest suburbs as well as Glen Ellyn and Wheaton in DuPage County–as examples where single-family prices are rising and development opportunities are scarce. On the other hand, investors should proceed with caution south of Interstate 55, Marcus & Millichap says, where job growth has been flat.

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