Tuesday, August 21, 2018
Sunday, April 1, 2018
Commercial Property Inspections - An Emerging Opportunity
Finding a property inspector qualified to perform comprehensive evaluations of commercial properties isn't easy. Every inspector I know is a "home inspector" specializing in residential inspections, not commercial, though many will perform commercial inspections on occasion. I'm primarily a residential inspector who's done some commercial inspections on the side over the last 18+ years, but as of late my income from commercial property inspections has grown exponentially because of the increased demand for (and limited supply of) commercial property inspectors. I've inspected medical offices, restaurants, multi-family dwellings / apartments, grocery stores, office buildings, warehouses, retail stores, manufacturing facilities, schools, agricultural operations, bars / taverns, and assisted care facilities.
Commercial buildings are fewer in number than owner occupied residential buildings and don't have as high of sales turnover rates, thus there's been less of a demand for inspectors to investigate the condition of commercial properties at the time of sale relative to whole home inspectors.
It's been my experience that most commercial buildings are sold without comprehensive general inspections. Instead of hiring a general property inspector, commercial property buyers or owners are often more likely to have maintenance personnel, civil engineers, or systems specialists (plumbers, electricians, HVAC technicians) check out various components of a property.
There are few contractors or inspectors that understand the comprehensive elements of a commercial property relative to construction, mechanical systems, and the extensive rules, standards and guidelines that apply to commercial properties. There's a breadth of uses for commercial buildings that have to be considered in context with regulations imposed by various different governmental agencies relative to those uses, and few inspectors have a good understanding of those regulations or how they apply to different buildings, of different styles, constructed in different time periods, and used for different purposes. I have a unique background because while in college I did commercial property maintenance for three summers and later worked as a plant engineer at a food processing facility. After graduation I was a project manager for two different contractors that did commercial construction and commercial restoration. That background has served me well.
Unlike owner-occupied residential structures, commercial buildings serve a single purpose for their owners - production of income - thus the costs associated with maintenance and repairs relative to rental income are usually the most important consideration for commercial property buyers and owners, and the inspector must be cognizant of that fact when evaluating the conditions and life expectancies of a property's various components.
Another challenge of inspecting commercial properties is working around tenants, thus an inspector must often work outside of normal working hours or hours of operation of a non-vacant property to perform the inspection.
Commercial property inspectors must be able to evaluate the comprehensive components of a property and convey those evaluations accurately to a buyer in order for the buyer to weigh the financial risks of a purchase. Failure of an inspector to find and report serious problems can be costly to a purchaser, and depending on whether the inspector might have been negligent at any point during the inspection or creation of the report, he or she might be liable for those oversights.
Commercial inspections are time consuming, require extensive knowledge on the part of the inspector, and can expose an inspector to huge liabilities, thus the inspections can be expensive. The cost of a commercial property inspection starts at around $750 and that cost might increase based on the property's size, value, accessibility, and/or the amount of time it takes to do the inspection and report.
I will continue to do home inspections as I've done for the last 19 years, but I'm expanding into the commercial market more aggressively to fulfill the growing need for such inspectors.