“I made $50,000 last month, but not in the stock market – the value of my apartment rose that much.” That’s common in conversations in New York lately. It seems like everyone wants to own a piece of the city. Many owners of rental apartment buildings are taking advantage of the highest prices in history to sell to investors who plan to convert them into residential condominiums, selling individual units for prices ranging from $750 to $3,500 a square foot.

A report issued by Real Capital Analytics shows condominium converters accounted for 45% of sales volume in the apartment market in January.

“Investors are purchasing any form of real estate which can be converted to a residential condominium,” the chairman of Massey Knakal Realty Services, Robert Knakal, said. “In 2004, 4,600 multi-family rental units, including non-residential uses such as office and loft, were converted from residential into condominium, as compared to an aggregate number of 4,200 over the prior five years. In 2005, more than 20,000 condominium units of new construction will be arriving on the market.”

Recent major residential sales include the Sheffield at 322 W. 57th St. for $418 million, 201 W. 92nd St. and 200 W. 93rd St. for $54 million, the Pennmark at 304-324 W. 34th St. for $240 million, the Clearwater portfolio of 10 buildings in the East Village for about $90 million, 184 Thompson St. for $54.3 million, and 301 W. 53rd St. for $130 million.

Over the past nine months, local investors bought a number of notable residential rental buildings with the intention of converting them into condominiums. In September, the City Investment Fund and RFR Holdings bought 350 E. 82nd St. A partnership including the Chetrit Group, Lloyd Goldman, and Stanley Chera paid $61 million last year to Mount Sinai for a residential tower at 1200 Fifth Ave. Property Markets Group paid $60.2 million – $1.25 million per unit – for the vacant 48-unit 823-825 Park Ave. RFR Holdings paid $46.3 million, or $508,600 per unit, for the 93-unit 25 Fifth Ave. A vacant apartment building at 232-236 E. 46th St. was sold for $43.8 million, or $463 per square foot. A block away, a 200,000 square foot commercial building at 303-317 E. 46th St. was sold for $41.5 million, or $207 per square foot.

***

Last week, an offering plan was approved for the sale of condominium units at 823 Park Ave., which is undergoing conversion. “Without any sales brochures, the phones are ringing off the hook for units which are priced in excess of $3,000 per foot,” the president of Property Markets Group, Ziel Feldman, said. He will soon begin to sell units in Herald Towers, the former McAlpin Hotel across from Macy’s. The initial price for an apartment is projected at $750 per square foot.

A number of residential properties are on the market that could be converted into condominiums. Earlier this month, Oregon Public Employees announced plans to sell three buildings with 380 units at 1430 Third Ave., 1438 Third Ave., and 254 Park Avenue South. The buildings are expected to fetch $230 million, or $600,000 per unit. Last week, it was announced that CIT plans to sell its 50% interest in the property it owns with Richard Ravitch, the 1,470-unit Waterside Plaza on the East River, stretching from 23rd to 30th streets.

Later this week, an apartment building on Madison in the 60s is expected to sell for $95 million, or $700,000 per unit.

By the end of the month, the final bids will arrive for 211 E.51st St., a vacant 87-unit residential building. It should go for $40 million. Later this month, a 48-unit residential building in the Sutton Place area will be marketed for about $60 million. The 44-unit building at 142 E. 49th St. should fetch about $21 million.

The estate of Sara Korein is one of Manhattan’s largest residential property owners. Earlier this month, the estate announced plans to sell 220 Central Park South, a 150,000-square-foot, 124-unit rental building that offers purchasers additional air rights. The superbly located property could sell for close to $175 million, or $1.4 million per unit.

The Sun has learned that one of New York’s leading real estate families is planning to sell a residential tower near Time Warner Center. New York Life Insurance Company’s Manhattan House, which occupies an entire city block between 66th and 67th streets and Second and Third avenues, may go for more than $600 million.

***

With average prices for condominiums exceeding $1,300 a square foot, an investor might not even earn a return, coupled with the risk of renting the unit. Few people are fully aware of the costs and risks of ownership.

Last week, a podiatric physician called me to discuss the investment purchase of a two-bedroom, two-bath, 1,100-square-foot apartment in a project under construction in Midtown. The cost of the apartment is $1.6 million, with monthly maintenance and taxes of $1,300. If he financed 80% of the purchase price, the monthly payment of the mortgage for principal at a rate of 6% would be $6,400 per month, resulting in a monthly outlay of $7,700. Unfortunately, the market rent for this unit is about $5,000, resulting in a negative cash flow and a significant loss.

I have to concur with Robert Knakal’s take on the situation. “Unfortunately, a significant factor in what is driving these sales is that people are hearing about and reading about the fortunes being made in real estate, and everyone wants a piece of the pie,” he said. One must truly understand the risks involved in owning residential condominiums for personal use or investment.

Mr. Stoler is a television broadcaster and vice president at First American Title Insurance Company of New York. He can be reached at mstoler@firstam.com.