When a buyer makes an offer on an investment property, it is usually only after a thorough inspection of all of the data that is available on the financial records of the building. The physical inspection of the property could be as important or more important than the rent and expenses.
Some investors pay more attention to the data than the structure. With a physical inspection of the potential investment property, a buyer may be able to:
• Work out a better price.
• Get ready for any upgrading or maintenance expenses.
• Avoid catastrophic repair bills for detectable problems.
• When actually purchased, get a higher return on the investment.
Where to Start
First, the investor needs to know what experts to call. He needs to know what needs to be inspected and how to do it. The property must be verified as physically sound and is a worthwhile investment.
There are some broad categories of problems that investment properties are subject to, and the type of expert that is needed for the inspection.
- Soil Conditions. When a property is located on certain types of land, a professional soil engineer or geologist should be called. Property could be low-lying or reclaimed land; a former landfill or dump area; on hilly or mountainous terrain; located at lakeside or seaside; has structures or piers, pilings, stilts, or other unusual foundation conditions. Is the actual foundation of the building dry and clean with no holes or cracks?
- Drainage. If the property is located within a floodplain area, it should be carefully examined by a civil engineer. The buyer can check basements and interior walls for signs of water damage. Also an inspection of the plumbing system for any signs of leaks or signs of old leaks.
- Elevators. If the property has an elevator, has it had the proper inspections in recent months? Elevators and electric systems should be inspected by professionals in those fields.
- Fire Suppression System. Is the fire system inspection up to date?
- HVAC. Representatives of the companies that manufactured or installed the heating, ventilating, and air-conditioning systems.
- Roofing. A roofing consultant or structural engineer should be called to determine age, condition, ability to withstand loads, etc.
- Pests. Pest control companies are able to check for termites and other damage-causing pests.
- Environmental Inspection. Check for contaminants on or near the property.
- Government Records. Check the local building department and see what permits were issued and when. Some records may also show when fire inspections or health and safety inspections were made. Any violations will be on record. The plans and specifications of the building may also be on file. These may contain the names of the original architect, engineer, contractor and developer.
The investor may wish to contact one or more of these if any questions need an answer.