One of the factors that help us serve our clients is our experience as a commercial appraiser, which helps us look out for easement and encumbrance issues that will come along legally with the transfer of ownership. In this case we have a small sub station that services the whole building, but the buyer is only buying a single unit, that the substation happens to be in. Now we do not inspect these utility maintained specialized equipment, but we do track down how it being in our clients unit will affect them, by ordering deeds, CC&R’s etc. All of this is above and beyond the typical commercial inspection, but we believe in fully serving our clients to our highest capacity, and our experience in other fields of Commercial Real Estate allows us to do that.
A commercial property condition assessment also addresses the surrounding parking facilities. Namely the condition of the asphalt paving. Very often buildings are sold right before a host of expensive maintenance procedures are coming up that can reach into the hundreds of thousands depending on the building size and how long ago it was built. Here we have paving that in the least needs to be crack and seal coated, but there are places at this buildings parking that will need total repair too.
If you for example have a triple net lease, and it is time to return the building to the owner (depending on how exactly your lease is written) you are most likely responsible for the upkeep, and maintenance of the building and its amenities. This typically includes the major appliances, and you might think that since they all work fine that there is no legal obligation you can be stuck with. BUT, this can be misleading in the common sense world because all major appliances have a recognized expected effective age that describes how long they are expected to last, and when they are expected to be replaced. The last phrase is key, in that even if a major appliance (i.e. roof mounted furnace, or any HVAC units) is working fine, but it is older than its expected effective you can be held liable for its replacement even though it works fine. This is really for a reason though because once a unit is beyond its effective age there are other components that its older operation can negatively affect. If you don’t get an inspection, or at least know when these appliances are due to be replaced, and your owner does, you could be held liable for anything that is beyond its expected effective age. The photo shows an ID plate on an A/C unit that does work, and is into its 30th year of operation, but its effective age was up long ago.
A commercial roofing membrane dosnt have to have holes in it, or be worn out to cause leaks that will cost the owner oney by destroying the components underneath. It has to do with how the roof membrane has been installed. Here we have a photo of incorrectly installed PVC membrane that actually LOOKS fine by the surface condition, but there are several deficiencies within this photo. It has to do with the parapet coping and the way the horizontal membrane is connected to the what should be a vertical membrane and the cant stripping that should join the both. The point is there are many components to a commercial roof that make up the whole system, with any of which that may be missing or installed incorrectly can shorten the effective life of your commercial roof. We’d be happy to explain in detail what is wrong with this picture, just give us a call for any questions that you may have concerning any problems you may be having with your building, or plan to buy, or lease.
Often a seller will tell us the roof has been replaced, and at first glance, even with invoices it can appear this is sufficient, but sometimes there can be inadequacies built into this recover. Different buildings have different roofing systems with insulation needed to be part of that system, but is not always allied in the same manner. Sometimes it is laid under the roof in between trusses, sometimes it is directly underneath the membrane, and this is where we see corner cut at times. In this case the roof has a fairly new EPDM roof membrane applied, and everything appears good, but the insulation and sheathing underneath were not replaced (not always does the sheathing require replacement), it all depends on how wet it was allowed to get, and then covered up deteriorates with wood rot if the old membrane was left long enough to leak all over the under components. This also compromises the insulation system as well. It is for this reason that although we do employ drones, we do not use them to inspect roofs as it is imperative the inspector “feel” the roof surface to detect any softspots, and then back up any theories of cause with thermography in order to get a total level of effect from this possible deficiency. In this case the roof membrane was replaced, but the rotted sheathing and compromised insulation were left with the new membrane laid over the remaining deficient components thereby exacerbating the problem by sealing in the moisture to let the wood rot fungus propagate. This severely shortens the “new” roofs effective lifespan and increased the cost to cure in our long term cost projections provided to the client.
Often Commercial roofs are patched….Extensively, often to the point of having multi layers, which TPO, PVC, and other membrane based roofing systems are not intended by manufacturer to exceed two layers at localized areas. This gives the membrane a chance to peel up from sun, lack of adhesive (depending on methods used to lay the material) etc. Its very important to keep the roof waterproof and one reason is the insulation that may be directly under the membrane, or lower down between the steel (or wood) trusses. Once that becomes wet, its hard to determine how far the moisture travels and that moisture can compromise other expensive systems through rust, shorting out electrical, and in the wood’s case..rot can form which will structurally degredaate the entire roof……Costly!!
Its good to know the health of your power transformers. These are often hidden up between the ceiling tiles and the roof. What they do is transform the power voltage & amperage to a usable to your appliances level of energy. For example if your building has 600 volts coming in with a 3 phase supply, your water heaters and your office equipment needs to have plain ol 120 volts supplied to them.
There are different types of power transformers. They do need to be cooled, some are dry & some wet. (Thus means either by air, or a cooling oil) which brings us to the real point of the blog. Your transformers may be leaking which will eventually lead to overheating & failure. And if you have a triple net lease, that cost will be yours, and that will be high. So it’s good to know how the invisible (to normal folks who use the building) equipment in you’re building are working to avoid avoidable unnecessary costs. HINT: If you’re transformer is outside and on the property your still probably liable for it, but looking to see if it’s got shiny dark staining on the outside, that. will tell you, you have a leaking oil cooled transformer.
Often a bid is required by an actual contractor that would agree to do the job for an agreed fee, oor rate. This is a s opposed to the usage of cost reproduction software, that often cannot address the complexities of fixing, or replacing steel over 18′ high, and on a vertical, and upside down .
This though is just part of our service.
Commercial actual estate loans are appreciably special when as compared to residential loans. They really are a whole lot greater complicated as they carry phrases and conditions which can be very distinctive when as compared to that of residential loans. This is one of the reasons that most of the investors worry to assignment within the business real estate market.
Smaller traders of residential real estate are commonly restrained to someplace around 4 to ten residences which can be valued in between hundreds and heaps of bucks before the creditors finish that it’s the sufficient threat level and no further loans could be made. The mortgage necessities for business houses can appreciably range among the non-public creditors and banks. Also, the loans which are held within the portfolio of a single lender can also range based totally on the risks perceived via the creditors.
Commercial Bank Loans
Normally, the banks want you and also you and your companions to come up with a minimum of about 20 – 25% of the belongings cost because the down charge. For example, if the property cost is ready RS four Cr, you may have to make a contribution approximately RS 80 Lakh- 1 Cr as the down payment. Also, the current researches have proven us that, maximum of the corporations have failed due to the shortage of adequate capital to fulfill the wishes.
For that purpose, banks frequently require the business keep a good sized cash reserve that may be drawn on if cash go with the flow isn’t always good enough to make the mortgage payments. This economic requirement is in addition to the hefty down price. One approach that a few commercial buyers use is borrowing as plenty money as they are able to (even at a higher hobby charge) to offer adequate capital to build out the commercial enterprise and thereby growth cash drift.
Private Commercial Loans
Private lenders or the non-financial institution creditors normally provide much less rigorous necessities for industrial loans. There are some creditors who require lower down charge (variety of 10-15%). These creditors regularly agree to hold to the mortgage quantity up to twenty or 30 years until it’s paid absolutely (in maximum of the cases). However, they charge the marginally higher hobby price whilst compared to banks (1% or 2% better than financial institution charges).
But while you do all of the maths, the higher interest charge might not appearance very high-priced as it seems the first time. Calculate the cost of higher interest over the duration of mortgage and evaluate it with the price you pay to open a brand new loan (2 or 3 times as the balloon bills come due).
The emergence of private or non-banking lenders is difficult the banks on their traditional terms of loans. While the banks are continuing to tighten the necessities to sanction the mortgage, those non-public creditors are shifting towards a larger share as it’s far making it less complicated to qualify. So, if you are seeking out a smaller industrial mortgage (less than 15 Cr) or a medium loan quantity (less than 35 Cr), don’t forget taking it slow so that you can locate the lenders who can provide you the ideal time and time period constraints.