Over the years I have witnessed many mistakes made by buyers of Commercial and Multi-family properties. Here are a few of the most costly:
1. Not getting a professional inspection done on the property BEFORE you buy it. If you don’t know exactly what you are buying then you don’t know what needs to be done immediately, what needs further investigation or what the costs to repair will be. This could be as simple as debris on the roof which will block drainage. To the untrained eye this could appear to be insignificant. True story – we told the buyer there was debris on the roof which was clogging the drains. They did not get it removed. A heavy rain flooded the roof which then collapsed and caused many thousands of dollars in damage.
We sometimes hear buyers say they don’t need an inspection “because the building is new”. We have seen expensive-to-remedy flaws even in brand new buildings.
2. Not having a qualified realtor help you through the process. I was on a site doing an inspection and found out my client did not have a realtor. When I asked him what he was going to use the site for I found out they were planning a major conversion to put in a restaurant. I asked him if that was permitted at this location and it turned out that he had no idea that some areas did not allow restaurants due to zoning restrictions or lack of parking. These are the things a qualified realtor knows and can save you untold time, heartache and money.
3. Not getting the parking area resealed on a regular basis. Another true story: the asphalt parking area was left unsealed for over ten years and was now crumbling. Had the area been sealed at a cost of roughly $1,000 about every 5-7 years, the savings would have been approximately $10,000. The cost to reseal is about $.10 – .20 per sq. ft. The cost to resurface once it is allowed to start falling apart is approximately $1.50 – $2.00 per sq. ft.
4. Not having the HVAC system regularly serviced. I was inspecting a roof mounted system where the owner decided that instead of changing out the filters on a regular basis, he would just not put any filters in the units. This will save money right? Wrong! It actually caused the internal workings to get dirty and this caused the units to operate very inefficiently to the point that they began to break down. The cost of a filter is usually less than $10 for a very good filter. Had these filters been changed regularly it would have saved many thousands of dollars.
5. Lack of maintenance for the building exterior. Many, many times I see wooden trim, such as at the roof edges or on the sides of the building that had not been touched up over the years. The resulting damage costs many thousands of dollars to remedy. Another example is failing to have the decks sealed when there is a sign of wear or when cracks develop. This mainly occurs with apartment buildings. Again, as in example 3 above, sealing the decks is usually less than 1/10th the cost of having the surface redone.
6. Not having an internal camera inspection of the plumbing waste system when advised to do so by the inspector.
Another true story: I did an inspection on an older, multi building site and had recommended a camera inspection of the waste system. This was a manufacturing site and it was not known what had been poured down the waste lines throughout the years. An internal camera inspection was the only way to determine what shape they were in. The buyer decided he did not want to spend the $300 – $500 it would take to do this. He moved into the vacant buildings and within 30 days all his waste lines began backing up. He then had the camera inspection done and found out this site was not even linked to the city sewer but had a large underground waste tank on the site which was no longer permitted. This cost him $35,000.00 to fix properly.
The most costly mistake made by any commercial, industrial or multi-family buyer is not performing thorough due diligence. Use a qualified realtor and get a professional inspection. Lastly, listen to them and take their advice! After all, they are here to help and protect you.