Personal Finance

Triplex Splitting and Condo Selling

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  • Nov 24th, 2013 9:54 am
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[OP]
Deal Addict
Jun 6, 2007
1025 posts
136 upvotes
KINGSTON, Ontario

Triplex Splitting and Condo Selling

Has anyone ever purchase a multiplex (3-5 units), split it up (legally) and sold as condominiums?

I haven't noticed this being done - there must be a reason why.
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Feb 15, 2008
26318 posts
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Calgary
Just off the top of my head:

a) Usually requires a change to zoning or the consent of the City.

b) These units are usually bought and owned by small landlords who generally prefer to be landlords, not merely employees of a condo.

c) Entire buildings are financed, while financing could be difficult for a landlord to obtain on a sub-divided unit.

d) Extra legal costs to turn into condos.

In other words, a conversion is extremely disruptive to the typical 3-5 unit triplex/quadplex/quintplex model, of the owner living in one of the units, and using the others, as well as his personal labour, to pay on a mortgage. Unlike larger apartment buildings which are owned either by relatively wealthy individuals, or by groups of investors who generally hire a property manager to take care of the building.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Fanatic
Jul 3, 2011
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Thornhill
OP, yes I've seen it done but with no less than 4 units although I suppose conversion to a 3 unit condominium building is probably doable.

I've also seen them take longer to sell and from a client I had who was interested in a unit that had a total of 6 units, it came down to long-term maintenance fees, the cost of which we presumed would be exponentially higher per unit holder than in a larger building. A secondary issue was that building management could have been a problem as it was too small to require anyone full time leaving the owners at someone's mercy.

You do need zoning and condomimiun conversion approval.

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licenced wrote:
Nov 17th, 2013 6:49 pm
[...]
Actually they do. [...]

A landlord that has financed a quintplex, and sub-divides it, would have to obtain individual financing against each of the units. Which, under CMHC qualification standards, could very well be more difficult than obtaining blanket financing on an entire building. An obvious issue for a smaller landlord unless all but the primary unit were sold at once. To CMHC, it would look like one speculator holding 4 individual condo units, not 1 landlord holding a quintplex. The rules are different.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Jul 16, 2003
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Now the eternally unemployed engineer wants to discuss real estate expertise with realtors.

[...]
Andre Oliveira - Mortgage Agent
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laptop-tech wrote:
Nov 17th, 2013 7:27 pm
Now the eternally unemployed engineer wants to discuss real estate expertise with realtors.
licenced clearly didn't know what she was talking about. You, of all people, a mortgage broker, should know that financing rules are very different for multiple unit buildings compared to single unit condos.
[...]
[...]
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Sr. Member
May 11, 2008
582 posts
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Vancouver
dgodsell wrote:
Nov 17th, 2013 3:23 pm
Has anyone ever purchase a multiplex (3-5 units), split it up (legally) and sold as condominiums?

I haven't noticed this being done - there must be a reason why.
One of the larger challenges would be the zoning.
The city may or may not have any plans in allowing the densification of certain residential areas.
[OP]
Deal Addict
Jun 6, 2007
1025 posts
136 upvotes
KINGSTON, Ontario
Thank you for all the responses. What rigmarole would be involved in setting up a condo corporation for a triplex/quadplex? Would one have to hire an engineer to do a long-term capital replacement assessment.

How about condo insurances - any idea on whether these would materially differ from home insurances?

Regarding zoning, would it be better to have a lawyer approach the city?

Thanks again.
[OP]
Deal Addict
Jun 6, 2007
1025 posts
136 upvotes
KINGSTON, Ontario
My instincts are that splitting triplexes into condos - specifically low-end condos - would be a great way to open up the non-existent sub $140,000 market for relatively impoverished home buyers. E.g., purchase a triplex apartment for $300,000 and sell each of the units for $120,000 - $140,000 - or enough to compensate for all the hassles listed above.

Targeting single young professionals for whom without a second income a home is beyond reach.
[OP]
Deal Addict
Jun 6, 2007
1025 posts
136 upvotes
KINGSTON, Ontario
Here's an example

Eight-apartment, four condo home available all for sale as a complete unit: $499,000.


OR

Selling individually for $139,000-$149,000. E,g, Link

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