Because they converted their apartment building to condominium ownership without a developer or outside investor, 63 tenants of 112-unit Monroe House in Foggy Bottom each expect to pocket $5,000 to $8,000 in cash profits by early next year.

Residents who bought their apartments this fall paid $8,000 to $15,000 below the prices being quoted to outside buyers -- now around $45,000 to $57,000. In addition, they have saved thousands of dollars by carefully monitoring the $1.7 million spent rehabilitation of their building, located at 522 21st St. NW.

Real estate attorneys and brokers say the tenants are the first group at a large apartment building to take the District's condominium conversion law to its philosophical end.

"By buying the building and then taking the unique step of becoming the sole developer and the sole applicant for construction and individual financing, the people at Monroe House have really run with the law as far at it can go," said the agent who helped them, Joanne Pernick.

"What they've finally put together is what you could call the Yugoslavian condo alternative" to pure real estate capitalism or pure socialism, she said: "The 'workers' in Monroe House took over the property they once rented, formed committees that met into the night and planned a very capitalistic sort of end result. That's very close to the Yugoslavian economic approach."

Monroe House tenant leaders smile at the suggestion that they artfully blended conflicting economic theories into their condo conversion. They also emphasize that functioning as developers opened their eyes to some hard facts of life about lenders, lawyers and others connected with real estate.

Getting financing -- first a short-term loan to acquire and renovate their building and later commitments for financing individual apartments with long-term mortgages -- "was probably the most grueling, frustrating part" of the whole conversion effort, said Sarah Maddox, leader of the tenant board of directors.

She said several banks and savings and loan associations "tried, in effect, to take away candy from what they saw as babies" by quoting fees and surcharges on Monroe House loans that experienced developers would never stand for.

One Baltimore S & L, for example, wanted to charge the tenants two extra percentage points on the individual apartment loans, as well as a highly unusual one-point "pay-off fee" for each loan actually disbursed, Maddox said. That last fee would have added $1,000 to the price of every apartment, she said.

Maddox said most banks' reactions to her development committee's applications ranged from "polite kiss-offs" to rudeness. "Nobody would believe that a bunch of tennants would actually be able to put this conversion together," she said, except Joanne Pernick, of Begg, Inc. Realtors.

With Pernik's advice and contacts, the tenants finally negotiated highly favorable financing with National Savings & Trust Co. and American Federal Savings & Loan Association, both in the city.

Their acquisition and rehabilitation loans from NS&T, in fact, offered about as high leverage as any developer could expect: $5.5 million for one year with a $200,000 (3.6 percent) down payment and an interest rate that floats at 2 percentage points over the bank's prime rate. The initial American Federal commitments on individual apartment loans were made at 13 3/4 percent.

The tenants could have "bought down" (subsidized) interest rates for buyers from outside the building -- as do many developers who advertise below-market mortgage rates -- but it would have raised costs per unit and cut into profits.

Convinced that Monroe House would sell out quickly (only a handful of units are left, after just six weeks of sales to the public), the tenants who bought kept their financing costs low and their prospects for profits high. w

Negotiations with lawyers were also a challenge, the tenants said. Instead of quoting hourly fees, as they would to professional developers, several law firms demanded a piece of the action on all condo sales, tenant leaders recounted.

"When you really get down to it, though," she observed, "there's a limit to how much candy you can take away from babies."