By Chris Lovett
Special to the Reporter

It wasn't the first time the three-decker on the corner of Brent Street and Melbourne Street had gone into foreclosure. Michael Stella, a property investor in Dorchester for more than 30 years, remembers the foreclosure in 1992. That is when he bought 101 Brent St. for $20,000 and resold it almost a year later, after what he described as a "total rehab," for $160,000.

Four owners and one foreclosure later, the house was acquired May 29 of this year by a developer listed as being from Mansfield, Mass. By July 10, all three floors were sold as condominiums to three different buyers. Documents show one buyer was from Brooklyn, NY, the others from two different locations in Maryland. The gross profit on the sale was $488,800. Stella lives a few blocks from Codman Square, and he says when he goes by 101 Brent, he still picks up trash.

"It doesn't look like anybody's moved in," he said, "which is very unique - for a condo closing to occur and you don't get a new neighbor."

Just as puzzling to Stella were the sales prices for each unit, from $289,900 to $299,900. Based on the cost of the lowest mortgage for the building, monthly payments would be more than $1,500, not including at least another $200 for property taxes, water and sewer charges, and condo fees. Real estate brokers say many three-decker apartments have monthly rents of $1,200 or $1,300, with the best units bringing in $1,500. Given those numbers, Stella figures, the conversion of 101 Brent doesn't make sense.

"I just don't see a reality-based buyer signing on to a $2,000 to $3,000-a-month obligation for a rental unit," said Stella.

Reality-based or not, buyers have snapped up other newly converted units in Dorchester's three- and six-family buildings over the past year and a half for even higher prices. In a three-decker market which has been cooling since early 2005, by some estimates, the units have been selling for as much as $375,000, some even with 100 percent financing. Some unit sales followed the purchase of their building by a few months, but others have taken place within a few weeks or even a few days. Figures for July and August, 2007 show the average Dorchester condo stayed on the market for almost 4 months.

The high-speed turnover among newly converted units has continued even into October, and observers of Dorchester real estate say they fear some of the transactions will hurt surrounding neighborhoods. Some buyers have already lost units to foreclosure. Even if new buyers step in and prevent a long vacancy, Stella sees the conversions as part of another trend - away from the owner-occupancy that helped keep so many three-deckers livable for more than a century.

"They stayed relatively decently maintained, and they worked," he said. "The neighborhood's being deprived of that because of the unit-to-unit conversion."

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Condo buyers in three-deckers can also be owner-occupants. But two of the buyers at 101 Brent also bought freshly converted units a little earlier this year in a brick apartment complex at 12-14 Lyndhurst St. Two sections of the complex were sold in May and June of this year, in separate transactions. Each time, most of the units were sold within a few days. All but two of the buyers were listed as being from outside of Boston, and four of them were from outside New England.

Two years earlier, 12-14 Lyndhurst and a larger apartment complex next door, at 4-6 Lyndhurst, were described as the "Hell Zone" in the Boston daily press. According to news reports, the area was plagued with drug-dealing, prostitution, fights, and gunshots. The problems became more widely known when a crusading church leader, Rev. Bruce Wall, temporarily occupied one of the apartments at 4-6 Lyndhurst St.

Two years later, the windows of 4-6 Lyndhurst are covered with plywood, but the non-profit Codman Square Neighborhood Development Corp. (CSNDC) has plans to convert the complex into affordable condominiums at roughly $140,000 to first-time home-buyers. There would be deed restrictions to encourage owner-occupancy and discourage speculation.

If the CSNDC development goes according to plan, that would enhance the market value of neighboring property. But the CSNDC's interim executive director, Mat Thall, said he was puzzled by the selling prices at 12-14 Lyndhurst. All but one of the units sold for prices ranging from $250,000 to $299,000.

"If they in fact really paid that amount of money," said Thall, "I don't think they're going to make a profit for a very long time."

The building at 12-14 Lyndhurst was converted by the same limited liability company that sold off newly converted units in a three-decker at 365 Centre in August. The least expensive unit at 365 Centre St went for $288,000. One buyer was from New Jersey, and the other from Virginia.

The company is co-managed by the developer who converted 101 Brent Street. He also manages limited liability companies that bought two six-family houses on Parkman Street. The first was acquired in September for $790,000. All six units sold within three days, for a total of more than $1.6 million - an increase over the previous total by $849,700. The buyers were all from outside of Boston, and some had bought other units in Dorchester. Two of those units were purchased just a week earlier. By the end of last week, the adjacent house was purchased and five condos were sold the by the same day for a total of more than $1.3 million.

Attempts to reach the company manger for comment were unsuccessful. But a real estate broker doing work in Dorchester, Rudy Crichlow of Coldwell Banker, had one more theory about why investors might want to keep buying three-decker units in a slow market.

"I've seen a lot of people turn three-deckers into rooms," he said. "That's the only way to pay the mortgage."

According to figures for July and August of 2007, the average price for a condo that sold in Dorchester was slightly less than $265,000. But the Dorchester average also reflects two very different condo markets.

"The ones that are stunning will sell. But the ones that are average are just sitting there," says Julie Simmons, Manager of the Jack Conway office in Dorchester.

Last week, a realtor with RE/MAX, Joseph Watson, was still having trouble having trouble selling a condo in a three-decker on Adams Street, just around the corner from Dix Street. The property was listed for $229,000. Watson said he thought it could sell, but only with some "cosmetic" improvements.

"You're almost better off buying a single family, spending the same amount of money and not dealing with tenants," said Crichlow.

"Basically, the prices they're selling at, they don't support the rents," said Crichlow.

But, even within the past year, some three-decker units that were less than stunning went for much higher prices. Two of them are in a boarded-up three-decker at 310 Fuller St. that was purchased in September, 2006 for $585,000. One unit sold in May of 2007, another in July of 2007. The selling price for each was $355,000. A few weeks later, in July and August 2007, the seller who did the conversion was faced with foreclosure on three units he bought on Whitfield Street. He bought them from a developer who converted three three-deckers in Dorchester that would later have a total of seven foreclosures.

Another conversion took place late last year in a boarded-up three-decker at 77 Draper St., on Meeting House Hill. The building was sold in August 2006 for $50,000 by an owner faced with foreclosure to a buyer from Brockton and a company registered in Indiana. All three units sold Dec. 29, two for $330,000 and the other for $320,000. All three had 100 percent financing.

While those units were being converted, Crichlow's father was trying to find buyers for other properties on the same street.

"My father had listings there for $250,000. It was like hell getting rid of them," said Crichlow.

"How do you get that condo to appraise for $330,000?" he wondered.

By August 2007, the lender for one unit at 77 Draper had filed to foreclose. Before the end of June, the city's Inspectional Services Department had condemned the building.

At 77 Draper, the company that filed to foreclose was the original lender. Among more than a dozen three-decker units with mortgage defaults tracked in this story, the loan had already been conveyed to another company. Most of the original and secondary lenders were mortgage companies.

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Realtors also remember that higher prices were more justified little more than two years ago, when three-deckers were easy to sell at a profit with only superficial improvements. And converted three-deckers with noticeable upgrades can be found anywhere in Dorchester on Navillus Terrace, on Meeting House Hill units sold Sep. 28 of this year for as much as $347,900, each with financing of $258,750.

In some areas where prices rose steeply, the improvements are hard to ignore. One example is Dix, which Crichlow describes as "resurrected." Located a few blocks from Fields Corner, between Dorchester Avenue and Adams, Dix has some properties still undergoing renovation. The street also has new wood-frame condo buildings with mansard roofs and colorful details.

According to a story that ran in The Boston Globe in 2005, one three-decker, at 74 Dix was being renovated by the same person who would later be involved in conversions on Brent and Lyndhurst. His intentions were described as quality in exchange for a reasonable return, both to be leveraged "by reinvesting in a community."

Documents show the house had been acquired in 2004 by a buyer from California for $550,000. Less than five months later - and less than two weeks after the Globe article appeared&emdash; the three new condo units sold for a total of more than $1 million to a single buyer from Roxbury. Two of them were sold with 100 percent financing. All three have since been taken by foreclosure and resold, none of them for any more than $220,500.

After the foreclosure, Crichlow was trying to sell the units next door, at 72 Dix.

"We can't sell them now," he said, "because 74 Dix foreclosed and sold for $230,000 or less."

But, even in this year's cooling market, one person's foreclosure can be another person's opportunity. The developer at 74 Dix and partners mentioned in the Globe story sold another unit that went into foreclosure on Gayland Street in the Dudley Triangle area. The developer then bought the unit in late January and sold it after ten days at a price increase of $110,000. The buyer was the same person who had bought a condo in a three-decker on Ashmont two years ago, when her address was listed as Miami, Florida.