It has come to our attention that some real estate investors want to know how to save money on property they own. How would this best be done? How do they keep from spending money unnecessarily? How do they make the money they do spend the most effective?
Here are my answers:
- Timely maintenance.
- Properly done maintenance.
- Maintenance done in the correct sequence.
What I am talking about here has to do with annual maintenance inspections and how they actually save you or your client money. I have been contacted in the last six months by some very large corporations, each with millions of square feet of properties and hundreds of buildings, all wanting to have annual maintenance inspections.
Although many of our inspections occur during the sale of commercial real estate or for triple net leases, the climate has changed. As we all know, sales have suffered greatly over the last 18 months in the commercial real estate market. Most of the inspections we are doing currently are cash sales. More people, for various reasons, are keeping their properties longer than ever before. They need to protect their investments. They need to have someone who has no vested interest look at what they have and determine how to keep their investment in the best shape possible for the least amount of money and for the longest amount of time. What do I mean by vested interest? In this case, I mean someone who stands to gain from what they find.
The concept is to have someone who has no vested interest look over the building(s) and give an unbiased report of:
- The expected useful life left in that system, such as the plumbing, electrical, structural, heating and AC, roofing and grounds.
- What immediate repairs or further investigation is needed for that system.
- What you should expect to pay to keep that system properly maintained over the next five years.
- What condition that system is really in right now.
- Is the responsible party for the upkeep and maintenance of the site doing their job and are they reporting it accurately?
The companies I mentioned earlier were getting reports of what was being done from a maintenance aspect but they had no idea if these reports were true because the people giving them the data had a vested interest they were companies who actually do the repair or construction work themselves after they provide a sometimes free inspection of the property. In short, the actual service their company sells is not property inspections, repairs/construction. What they need is a professional with no vested interest to give them an unbiased report including a list of what to do and how much these things are going to cost. Your inspector should be someone other than the guy who does the work.
With annual maintenance inspections you find out what condition the site is in, what is being done and how much things are going to cost. Now that the initial inspection has been done by an unbiased party you can get annual updates to determine if the recommended maintenance is being done and if so, if it is being done properly. The only way to know these is to have them looked at by someone who has no vested interest in whether or not what they see is good, bad or indifferent.
As I have said before, after many, many years in the construction trades and over 6000 physical inspections, I have come across a few pieces of wisdom. One of the most significant has to do with how much money is actually saved with proper maintenance. The statement of an ounce of prevention is worth a pound of cure has never been truer.
Have an annual maintenance inspection done, do the recommended items in a professional manner and do them when they are needed. If you do this you can expect your property to last longer than most, cost less in the long run and be worth far more when you do sell it in the future.