Basic Questions on Commercial Property Inspection Answered
By: Tilden Moschetti
Buying a commercial property is a big investment. If you’re in the process of buying an office building, shopping center, apartment complex, or another type of building, a commercial property inspection will help you make an informed decision on the property. Getting an inspection could mean the difference between a profitable real estate investment, or a disaster that you could have easily avoided. The right commercial property inspection will reveal the true condition of a property and the costs required to repair it. But what happens during a commercial property inspection? Is it really necessary? Read on to know the answers to basic questions on this important topic in real estate.
What is Classified as a Commercial Building?
Any building or structure located on commercial real estate is a commercial building. These buildings are put up to generate profit, either from capital gain or rental income. There are five categories that fall under commercial building:
Some examples of commercial buildings and properties include:
Special purpose buildings – medical office suites, sports complexes, storage houses
Who Performs a Commercial Property Inspection?
One option is to hire an engineer or architect because these individuals have expertise in building trades, facilities management, maintenance, and similar topics. On the downside, they may also charge a considerable sum for their services because of their specialized knowledge.
You can also hire the services of a commercial building inspector, as another option. There are many companies offering both residential and commercial property inspections however, bear in mind that these two structures are not at all the same. As such, it is crucial to hire somebody who not only has the technical know-how inspections but also understands that commercial properties are a company asset, business expense, and income generator.
What Are the objectives of a property inspector?
Purchasing commercial property is not only expensive; it also requires a great deal of consideration and research before a purchasing decision can be made. A professional property inspector will visually examine the structure and systems of the building so that you can know the condition of the property before you buy it. There are four things a commercial inspector will focus on during his or her inspection:
Five major systems of the building – Electrical, Mechanical, Heating, Plumbing, and Air Conditioning/Ventilation
The exterior of the building – outer walls, parking lots or structures, landscaping, and roofing
The Interior of the building – assesses if interior spaces meet local building codes, check for safety-related risks and hazards, look at walls, floors, bathrooms, offices, kitchen spaces, and similar areas. An internal inspection will uncover any need for renovations especially if the building is not up to standards.
Documentations and paperwork – appraisals, building plans, citations, certificates of occupancy, construction permits, evacuation plans, environmental studies, fire safety system records, floor plans, maintenance records, and surveys.
A thorough inspection report will include an objective analysis of the current condition of the property so that you know in advance if it will need any minor or major repairs. A commercial property inspection will help you learn what you could expect when it comes to potential major expenses such as replacing the roof, repairing the plumbing, or installing a new HVAC system. It uncovers both the seen problems and the unseen problems. After all, you never know what clues that new coat of paint could be hiding — there could be water damage from a leaky roof or plumbing problems that you would want to know about before signing on the dotted line.
Although most real estate investors understand their importance, there are some common questions many buyers ask about property inspections:
Do I Need An Inspection of a Newly Constructed Property?
Yes. Even though a property is brand new, it could still have defects. There are many details involved in the construction of a new building, and oversights can happen, especially if a lot of individuals are involved. Unfortunately, some builders/developers do not stand behind their workmanship and may not return to fix or replace defective components installed after the sale is complete. A property inspection will help uncover anything that may need correcting.
The Local Building Department Inspector Has Already Approved The Building, Do I Still Need Another Inspection?
To pass municipal codes, a local inspector will approve the building at various stages of construction. Even though it has met the minimum standards for use and occupancy and local regulations, you may have higher standards. Unfortunately, some local inspectors are usually loaded with inspections and therefore cannot spend the ideal amount of time required to thoroughly check the property. This results in important details being overlooked. Getting the services of a commercial property inspector is a smart decision so that you are given a more detailed and objective look at the property in its entirety in order to understand the complete picture.
What If The Inspection Uncovers Problems?
It’s important to realize that no building is perfect. Just because an inspector identifies problems, it doesn’t mean you shouldn’t buy the property. On the contrary, you now have an advantage because you are presented with options and you have the upper hand to negotiate with the seller because of the anticipated costs of repairs. At the end of the day, once you weigh your options versus your financial capacity, of your availability to get involved in future repairs, you can now make an informed decision on whether or not to buy the property.
Generally speaking, an unbiased commercial property inspection helps uncover problems with the property that may be major causes for concern in the future. Getting an objective assessment will save you both time and money. It is one of the surest ways to make a sound investment and confirm the overall integrity of the property. Furthermore, if you have proper knowledge about your property, it can actually give you an upper hand in any type of negotiation regarding the property. It also protects the safety of tenants, employees, and customers.
It helps to have a thorough inspection to protect your investment. A real estate lawyer can help you with your residential or commercial purchase. Talk to us at Moschetti Law Group. Call 888-664-1848 today!
At Moschetti Law Group, our practice serves the needs of Founders by providing real estate law and real estate syndication attorney services to Founders. Whether you are the Founder of a real estate empire or building a business and need assistance with purchase and sales, real estate transactions, or real estate litigation, we serve Los Angeles County, eastern Ventura County, and North Orange County from our office in Calabasas. We also have a primary focus on helping Real Estate Syndication Founders throughout the United States with forming their syndication, understanding crowdfunding, private placement memorandums, and operating agreements.