They can be. Here you convert an apartment building into condos. The opportunity comes from the conversion.

For example, a single apartment’s income may be $10,000 gross a year. Using a multiplier of 10, we learn that its sales value is $100,000. If you have 10 such apartments, you have a $1 million building.

On the other hand, condos in the area with the same square footage as the apartment may be selling for $300,000 apiece. If you convert the rentals to condos and sell 10 of them for that price, suddenly your building is worth $3 million. You’ve tripled the building’s value and increased your profits.

It’s not hard to see why condo conversions are gaining popularity. Keep in mind, however, that planning and building departments often impose strict regulations on conversions and, as a result, the conversion costs can be enormous. You might have to rebuild whole sections of the structure to comply with current codes. Moving existing tenants out may also be a problem in some areas, where you may be required to offer tenants first crack at the condos at a reduced rate. And because the apartment building is older, it may be more difficult to sell the condos than if they were brand new. Nevertheless, the potential profits are so high that many investors are wading in despite the risks.