We are next going to talk about inspecting all exteriors in our continuing 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
Inspect all exteriors: The majority of the problems in an apartment community originate from the exterior. Roof damage, chimney cracks, stairway repairs, and damaged siding are the most common ways for water to enter the building. Water damage is one of the most destructive forces to an apartment community. Water can and will cause mold, wood rot, water stains in drywall, and swollen wood and framing if not corrected. During the inspection of the interiors, note any water damage to ceilings, around chimneys, and over any exterior door way for water damage or corrected water damage. In those buildings where water damage can be seen, the inspector will need to take a closer look at the roof and chimneys to find the places where water has entered.
Typically during the exterior walk, the vision of what the property could look like will come into place. Many of the capital expense projects will come from this vision. A new paint color on the entire property can give the community a new face lift and change the dynamics of the residents.
When inspecting the roof, look for waves in the roof line, new patches in the shingles, and curled up edges. All of these are signs of an aged roof. Adding a new roof could be a costly upgrade, but the return on the investment will be well worth the expense in the beginning. When looking at the siding, either vinyl or Hardie siding, check for new patches, holes, different colors in one area, and for spots that are pulling apart and leaving gaps between the boards. All of these are signs that the siding could be a potential entry way for water. If the exterior is made of brick or stone, check for water entry above the windows and doors frames. As the building settles, it will leave cracks at those spots.
When it comes to due diligence, we must always “trust but verify” In doing the exterior walk and inspection, you plan to take one day to complete this part of the due diligence, depending upon the size of the property. During this time, focus only on the exteriors. Here is a list of items to inspect on the exterior walk:
- Fences, Garden walls
- Paved walks, Drives and Patios
- Retaining walls
- Decks, Terraces
- Surface drainage
- Roof, Chimney, flashing, valleys
- Gutters, downspouts
- Driveways, patios, decks, porches
- Exterior wall surfaces [brick, siding, stucco, trim, etc.]
- Entries, Porches, Balconies
Example: Upon driving up to a property, I noticed two things. First, the exterior of the buildings was brick and second, all of the brick was covered in climbing ivy. I wanted to run far away from this property, because I know all of the damage and problems that climbing ivy can cause. Upon further inspection of the exterior of buildings, my first thoughts to run away were confirmed. The ivy was a highway system for rats and mice. The ivy covered up all of the foundation cracks, and dug into the brick and mortar joints making them weak and crumble apart. After the due diligence inspection and the report given to the potential owner, my recommendation was two things. First, take down all of the ivy and put up Hardie siding, for $500,000, or put in new brick, for $650,000. The second recommendation was to walk away from the property. After presenting all of the facts to the potential owners, their decision was to walk from the property due to the potential challenges that they would face with rats, mice, and foundation damage. Sometimes the hardest choice turns out to be the best choice for a deal.