Fortunately for apartment owners, investor demand for multifamily product has remained strong even as prospective renters have purchased homes instead. The billions of dollars of debt and equity pouring into the apartment market enable sellers to fetch record prices for their projects: Nationally, capitalization rates are averaging 6.6%, according to Real Capital Analytics.

But capitalization rates mean nothing to converters because they aren't concerned with operating the apartments for a steady stream of income. Instead, their focus is on trying to maximize their returns by liquidating the units at the highest price possible. Converters are willing to pay a premium for properties over what conventional apartment investors are willing to spend — in some cases up to 40% more. That is providing an enticing exit strategy to apartment owners of all stripes — whether they're struggling to fill older Class-B properties or are operating new but stabilized Class-A properties.

Converters acknowledge that they are paying a premium, but are quick to add that the cost of acquiring and upgrading multifamily properties is far less expensive than new development. Plus, in densely populated urban markets, vacant ground simply doesn't exist for new development in prime locations, and converters anticipate those real estate values will continue to appreciate.

“The bottom line is that you can buy something for one-third of the cost that it would take to buy the vacant land and build something on it,” says Crescent Height's Galbut. “As time goes on and the world wakes up, that apartment isn't going to be selling for one-third of what it would cost brand new, it's going to be selling for 60% to 80% of what it costs brand new.”