Larry Nalbach decided it was time to sell his Everett apartment building as condominiums when it became difficult for him to climb the stairs and show units to potential tenants.

At first, the contractor and landlord wasn’t sure the 1929 brick building was a good candidate for conversion. Even with regular maintenance, the historic building in the Riverside Neighborhood still needed upgrades. But the demand for condominiums in the area convinced him. For Nalbach, choosing to convert the building to condominiums came down to dollars and common sense.

In his initial market analysis, he figured selling the building as-is would bring $80,000 a unit. If he spent $20,000 improving each unit, he could sell each unit as a condominium for $120,000. Even with the amount he spent on improvements, Nalbach expected to make 25 percent more on a conversion than selling the building as-is.

That’s consistent with figures compiled by Dupre + Scott Apartment Advisors in Seattle. The consulting firm estimates conversions typically bring profits of 10 percent to 20 percent.

Nalbach’s project didn’t quite happen the way he’d planned. He spent twice as much money as he intended improving the units. He also sold the converted condominiums for more.

“The good news was prices had escalated,” Nalbach said.

Area home prices had risen so much that by the time he began selling the units, now known as the Lions Gate Highland Condominiums, he fetched $150,000 or more.

There were risks. The biggest for Nalbach was getting sued. He called the quality of his construction work the hallmark of his career. Yet no matter how thorough and good the work during a conversion, contractors and developers risk a lawsuit, he said.

“As soon as people purchase their unit, one of the first things they get in the mail are letters from attorneys – vultures is what I call them – who want to go through with a fine-toothed comb looking for defects or perceived defects,” he said.

Nalbach was less worried about selling all the units. He offered tenants a chance to buy first. He sold all 22 within a year, including three to his former tenants for “considerably” less than the others, although he declined to say how much less. Another tenant wanted to buy but couldn’t qualify, Nalbach said.

“I don’t think people were too upset because they had plenty of notice,” he said of his former tenants. “It would have been worse if I had sprung it on them.”

Reporter Debra Smith: 425-339-3197 or dsmith@ heraldnet.com.