Inspect All Mechanical Facilities

Next we will help you save money on renovations as part of 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 facilities
  • Leasing and business offices
  • Common areas
  • Maintenance shops
  • Pool and pool systems

Inspect all mechanical facilities: Most of the unseen challenges of inspection come from the mechanical equipment.  They might look clean and new on the outside, but inside they could be completely rusted out and only able to last another couple of months.  During the due diligence walk through, it is vital to have a team member that understands mechanical equipment. They need to be familiar with the life of the equipment and knows what repairs the mechanical equipment need on a regular basis.  If you don’t have a team member that can do this, contact a local contractor with expertise with the equipment to be inspected.  In some cases, the contractors will require a small amount of payment for their services. When it comes to due diligence, we must always “trust but verify”. 

Here is a list of items to inspect on the mechanical systems.  Use this list as a reminder of the equipment that needs to be inspected:

  • Boilers, water heaters
  • A/C units – compressors
  • Garbage compactors
  • Water softeners
  • Electrical shut off’s
  • Transformers
  • Elevators
  • Outside lighting
  • Fire hydrants
  • Sewer pumps
  • Water filters/pumps
  • Electrical gate systems

Many of the items require an inspection from the city or county on a yearly basis.  You should insure that the inspection certificate is current.  The certificates should be located in two spots: There should be one next to the equipment and a second copy should be in the manager’s office.  

Example during due diligence:  After completing due diligence on a 285-unit property, which had 14 buildings, renovations were started on the project.  Four of the buildings on the property were existing buildings from an old military base.  These buildings were being converted to new apartment homes.  The boilers and large air handler units in three of the buildings were in great working order.  They only needed some minor tune-ups.  The fourth building equipment was a different story.

The general contractor and the developer were told the boilers and the air handlers were working when the base was active.  But they had been shut off when the base was closed several years ago.  During the due diligence, somehow the fourth building had not been inspected and the poor condition of the boiler and air handler where not known.  When the apartment homes where almost complete, the boiler and air handler units were inspected and found they were not in shape to be fired up.  There were several inspectors and contractors who  came to look at the units to get them ready.  Not one of the inspectors or contractors could agree on what it would take to insure the boilers and air handlers were ready to be used.  After many months, and several thousand dollars later, the units could be fired up and the apartments be ready for the new residents.  The time and money wasted at the end of the project could have been avoided if the shape of the equipment was know. By having a boiler expert and air handler expert inspect the units and then repair the problem units during the renovation phase of the building, the cost would have been much lower.  Instead, the developer was trying to complete everything at the last minute when residents were ready to move in.

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