Post about "Real Estate"

Get to the Truth in Property Inspections

You can inspect a commercial property for many reasons. It may be to potentially purchase, lease, sell, or even consider finance options and changes. The physical inspection process needs care and diligence so that you find the things you are looking for.

Whilst every property is different, these are some good rules of inspection that can help you on the road to gathering all the right property detail that you need.

  1. Take plenty of notes of the things you see. Include measurements of buildings both internal and external. Measurements are not just of the building but also the lettable space as this is what generates the income.
  2. Measure the site and seek plans of any surveys that may have been undertaken at earlier times. It may be wise to get a fresh survey done if questions of boundaries exist. Look for any encroachments with neighbouring properties. Talk to the adjoining property owners and tenants if you have any questions or doubts.
  3. The comparable prices and rental of property in the area will be calculated by $’s (or other currency) per m2 or per ft2. Always know the established averages and then how they may compare to your property.
  4. Get some idea of the construction costs of new buildings of the type you are inspecting. You can do this through information provided by quantity surveyors. Many will offer the information free of their website.
  5. Ask the existing property owner about any current orders, notices, encumbrances, rights of way, easements, leases, or matters of compliance that are current on the property and that may impact the property operation or future. Some of these things may very well effect how the property operates and therefore alter the value or price of the property.
  6. Take photographs as you proceed so that you can reconsider or discuss what you see around the property. Look for matters of deterioration or dilapidation; they can be both internal and external.
  7. If the property is industrial in nature, consider the potential legacy of earlier environmental damage to soil or environment that could impact future occupancy. Also check out any health orders or notices on the property.
  8. Heritage and Native title matters could impact the property, region, or neighbouring properties. Registers are normally kept on these matters, so check them out before or as part of the property inspection.
  9. Look for matters that could affect the structure of the property. Cracks, soil movement, drainage problems are just a few of the main ones. If in doubt seek an engineer’s report to help you.
  10. Walk around the local area and look at how the property and neighbouring properties function. Pay attention to egress, ingress, access, and signage on the property. Can the property be well identified from the road and is signage adequate to identify the property or business in occupation?
  11. Get details of the local services provided to properties in the area. Costs of electricity, water, and gas will also be a concern to some property tenants.
  12. Building operational costs or outgoings will be a key consideration for net income performance. You need to know that the property is inside the averages of property outgoings costs for the buildings of its type. If it is not inside the averages you have to get to the reasons for the differences. High occupancy and outgoings costs put off many tenants and purchasers to property.
  13. Inspect all parts of the property including the basement, car park, tenant areas, storerooms, toilets, plant rooms, warehouse, office area, and entrance or exit points. Look at the things that visitors to the property would see. What impression do you get from these areas?
  14. If you are looking at the property from an investment angle, you will need to consider the existing leases, income stream, rentals, lease terms, tenant profile, outgoings recovered from the tenants, and the future of the property given the leases in existence. Solicitors can help with the interpretation of leases and the stability they provide to the property income.

If in doubt always question the things you see in your property inspection and seek written evidence. Never rely on what the property owner tells you on critical facts without the written supporting documentation.