Property Condition Assessments- Case Study
May 27, 2017 // By:Scott Hamele // No Comment
By: Scott Hamele, DBIA | President and Founder of Nationwide Commercial Inspections, LLC
If you are in the process of purchasing a commercial building, do NOT make the mistake and forego having a commercial building inspection done; one that offers a Property Condition Assessment (PCA) report is beneficial. Most home mortgage lenders require a PCA as a condition of the loan. They want to make sure they are also making a good investment. However, most commercial lenders do NOT require a PCA. This doesn’t make any sense! The acquisition of commercial property is almost always the largest purchase for an investor. The commercial property’s sole purpose is to provide income for the investor. So why not make sure it is a sound investment?
8,200 sf retail building located in Kansas City, Missouri. Age- 6 years old. 1-story, slab on grade. TPO roof, Mixed masonry and stucco exterior finish.
This particular property was being purchased by an out of town investor that hired us to provide a PCA a few weeks before their due diligence expired. Even though the property was only 6 years old, the investor had concerns about the quality of the construction. We provided a Comprehensive PCA and found several deficiencies.
- Roof flashing and counter flashing was installed incorrectly allowing for water infiltration in the parapet.
- Joint sealants were missing around several aluminum storefront windows. Result was several areas where mold was identified along the interior walls.
- Drainage was inadequate after a landscaping company altered the elevation of a landscaping bed. Result was water ponding along sidewalks and premature deterioration of sidewalk to building joint sealant.
- Multiple HVAC wild air return air grates were removed and replaced with acoustical ceiling tiles. Result was the HVAC RTU was being starved of return air placing a high demand on the unit. The motor needed replacement and the overall conditioned air throughout the space was not conducive to a good working environment.
It was determined that over $20,000 worth of repairs and alterations needed to be made. The cost of the basic PCA was $3,000. The seller offered a $20,000 credit at closing. The buyers decision to obtain a PCA resulted in a 567% return on investment (ROI).
Nationwide Commercial Inspections, LLC uses its hands-on approach, architectural, engineering and construction expertise to create and develop high quality Property Condition Assessment Reports that are specialized for each customer and type of property. Their complete turnkey solutions align with the unique business needs of various types of real estate. Nationwide Commercial Inspections, LLC is located at 21961 West 83rd Street in Shawnee, Kansas. If you are looking for a high quality and trustworthy commercial building inspection, call (913) 667-7774 or visit their website http://NationwideCommercialInspections.com