We are continuing our series on top 8 things to inspect before buying apartments. Here is the list:
- Inspect every unit
- Walk all drive and parkways
- Inspect all exteriors
- Inspect all mechanical facilitates
- Leasing and business offices
- Common areas
- Maintenance shops
- Pool and pool systems
Walk all drive and parkways: One of the first parts of a property that is noticed by you as the investor of an apartment complex, or as a potential resident, is the front entrance parking spaces and/or concrete. Nice fresh asphalt with clean striping lines and nice curbing portrays to people, on a subliminal level, that the rest of the property is well taken care of. All of the other maintenance details are being paid attention to. If your property has damaged concrete, many potholes and alligatoring asphalt in the driveway, or blacked out lines in the parking areas, prospective residents will look to another property to find their new home.
In the process of doing the due diligence, it is very important to walk every driveway and to visually see all of the parking spots. During the walk, look for potholes, major cracks, and alligatoring. Check out spots where water is pooling in the driveways, inspect new concrete patches, and look at the curbing and note the condition of them on the overview of the property. While walking, note the spaces that have added lines, blacked out lines, and fire lane markings that will need to be re-striped. When there are concrete drives and parking spots, the cost to re-top all concrete is going to be very expensive. Putting asphalt over the concrete is not recommended.
If you want the look of new concrete for a driveway, a quick way to do this is to power wash all areas and then to re-strip and re-paint the curbs. To fix up asphalt, the quickest method is to re-top all areas with a 1 inch topping, then re-strip all lines and curbs. If that is to expensive, the next best thing is to just re-coat all areas and then re-strip the lines and curbs.
During the inspection walks, it is important to walk down every sidewalk and look for trip hazards. A trip hazard is any bump or crack in the sidewalk where there is a two inch rise from one side to the other. If the rise is more than six inches, it is considered a step. All trip hazards should be marked on a map of the complex, so you can repair them a timely manner. The cost of a lawsuit from a tenant outweighs the cost of repair or replacement of a sidewalk section.
Example: In doing a due diligence of a 285 unit property, the current management company knew about some major potholes that were around the property. The week before we showed up to do the due diligence, that company had the dumpsters moved to cover many of the potholes in the parking spots. The cost to repair all of the potholes was $35,000. If we were not diligent in our inspection and the new placement of the dumpsters, these outstanding repairs would have been a problem the new owner would have to fix. Not only would they have to fix the potholes, the cost of repair would not be in the budget. Because we noticed the potholes in the due diligence phase during the walks, the price to fix the potholes was used as a negotiation tool to lower the price.
Hare are some examples of the concrete and asphalt that we have seen during due diligence inspections.