Buying a new property is an exciting but critical investment that can bring profit or financial ruin. Taking the time for a successful building inspection that shows any potential pitfalls can help you make wise purchasing decisions. Follow a few simple steps to get the most from your inspection.
1. Pay a Fair Fee
If you’re the one paying for an inspection before buying versus an inspector OKing your building before moving forward, know what you should pay. For instance, Florida building inspectors’ organizations estimate a commercial building assessment will run between $1,250 and $2,500. The size, location and condition of the property can change the overall cost.
For a successful building inspection, you want to choose someone with enough experience to find underlying issues and who knows what to look for. Ask how in-depth the inspection goes, if they’re insured and what experience they have. A good inspection more than pays for itself in helping you avoid critical property failures.
2. Ask for a History of Renovations
One thing that can help you assess the structural integrity of a property is knowing what has been done as far as treatments and repairs. Pay attention to factors such as:
- The age of the roof and major systems, such as HVAC.
- Ongoing foundation problems or major leaks that may have caused unseen damage.
- Treatment for termites or other pests and what was done to rectify any damage.
- Recent upgrades to electrical and plumbing systems.
Your inspector should have already given you a report on many of these things, but one person can’t catch everything. In older structures, you’ll want to ensure the wiring is current and any older copper pipes have been replaced or are in excellent condition. A major leak can wreak havoc.
A well-maintained property will likely have fewer issues than one that’s been neglected for any length of time. Even a visual inspection can catch problem areas inside and outside the building.
3. Study Cap Rates for Commercial Properties
Knowing the cash flow and having an excellent inspection detailing necessary repairs can help you determine whether the investment is worth your time. Cap rates allow you to predict a structure’s future income potential alongside the net operating income currently flowing into it minus expenses. When you have a list of the ongoing renovations, a report on items needing fixing and an idea of how much income the property generates, you’ll have a clearer image of the overall investment.
4. Walk the Property With the Inspector
You’ll have a better idea of the scope of any repairs if you go along on the inspection. Not only will you see what needs repairing in real time, but you can ask additional questions.
Go armed with any documents approving renovations or additions. If the inspector asks a question, you want to be able to answer accurately and back up your statement. Doing so will avoid any potential delays.
5. Inform the Tenants
A truly successful inspection requires access to multifamily units. Let the tenants know about it at least 24 hours beforehand so you can access their spaces without running into legal issues.
Make sure you have a master key or other way to access residence for those who aren’t home during the scheduled inspection. A skilled building inspector won’t need to go into every space but may need access to certain ones where the roof is likely to leak or other issues might arise.
It’s best to prepare to enter them all so you don’t have delays. Local authorities will want to be sure the building complies with local landlord and tenant laws and provides a safe living environment for your renters.
How to Analyze the Findings
Whether you’re dealing with a local government inspection and have a list of items to repair or you hired an inspector to ensure the building was a good investment, you’ll want a written report of the findings. Review the paperwork carefully and assess the costs of fixing each item and whether it’s worth it to proceed.
Inspections are a regular part of running a commercial property. You’ll grow better at navigating them with each one you experience.
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