Today broker-blogger Malcolm Carter tackles a perplexing topic for apartment buyers: How many apartments for sale in a single building spells trouble rather than opportunity?
It's a subject we've explored before, putting the question to our expert panel back in December. The general consensus seemed to be that turnover topping 5-10% in a single year could signal a problem--but not always. Real estate broker Gordon Roberts noted, for example, that a high turnover may be par for the course in a building made of up of predominantly studio apartments, which tend to change hands more often.
Carter offers up a non-exhaustive list of less savory reasons for a bloated inventory of listings, ranging from a difficult co-op board to true (or false) rumors of bed bugs. He also correctly notes that "virtually none of the foregoing applies to new developments." Because mortgage banks demand minimum percentages of owner-occupied apartments, the buyer pool in under-owned buildings is limited to all cash buyers, resulting in an inventory surplus.
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