Chances are you are not an expert on examining the exterior condition of a building, and as your real estate agent, nor am I. Unless the roof is completely caved in, it will probably look pretty good to me. When you are doing your exterior inspections, you should think about hiring an expert who specializes in installing, maintaining and repairing every aspect of a property. You should create a list of categories that will need inspecting and organize meetings with subcontractors to inspect the property and obtain bids for any work that will need to be completed. For the most part, obtaining these bids is usually free, because contractors give them to earn your business.
Here is a list of general categories you will want to inspect:
* Paint and siding
* Asphalt & concrete work
* Heating and Air-Conditioning Units
* Pest Control Problems
* Fire Protection Systems
When you are obtaining bids for these items, don't just rely on one company. Take the time and effort to meet with a number of companies and obtain competing bids. This will save you money. At the very least, you can use one company's bid to negotiate a lower fee with another company or use their bid to get other bids (as regards to apple for apples). This can be overwhelming, so ask for help!
If there are any major items on the property that need addressing, now is the time to find out. Not after you own the property. If you don't take the time to contact professionals to make these inspections for you, you will probably never catch it.
If you are buying a multi-family residential property, YOU NEED TO WALK EVERY UNIT ON THE PROPERTY. Period!!! You will be truly amazed at the incredibilly werid stuff you will discovered behind closed doors. Just when you think you've seen it all, you haven't. You can walk into units where there is so much trash on the floor, you can't even walk. Or, you can enter an apartment, where you will find free roaming reptiles crawling all over the floor. I've seen holes punched into walls, going from one unit to another unit, I've been in apartments that were completely gutted by poor tenants, or apartments that had evidence of heavy drug use.
When you are purchasing a property, I recommend walking every unit and making a general list of notes as to their overall condition. I've found that the most efficient way to do this is to use a unit inspection form I call the "Vacant Unit Condition Report". Another good way to do this, is take a digital camera, take a picture of the door or unit number, then any pictures of the inside or things you want to a note of for later. Then go to the next unit, take a picture of that door unit number.....so on and so forth. This is a great way to jog your memory later, when you are back at your office writing down more detailed notes.
Once you have finished your interior inspections, you should take all the unit inspection forms and compile the data that you have collected into a spread sheet. It makes it much easier to estimate the dollar amount that will be needed to fix any interior issues.
Just like with the exterior, you will find many issues that need addressing on your interiors. Additionally, there maybe a number of isolated items - that may need to be replaced as well (i.e. cabinets, sinks, carpets, appliances, drywall, and counter-tops). All of these added up, can come up to some significant dollar amount - which you could be responsible for if not caught prior to closing. This alone, could result in a huge financial disaster for you. So be thankful for the due diligence process.
If nothing else, I hope this blog entry has impressed upon you the importance of doing your due diligence prior to making an offer to purchase. If you take nothing else away, just remember this - due diligence if done properly can save you millions of dollars.