Carefully walk the exterior of the building with a certified building inspector and note any unusual items in need of repair. If any construction deficiencies are detected, contact a professional who specializes in potential construction defects. Any construction that may not meet current building codes needs to be addressed and, if required, corrected.
Other general mechanical items that need to be examined include elevators, fire sprinklers, HVAC, security and telephone systems. Get a copy of the roof warranty to verify the remaining life. If the document isn’t available, have the roof professionally inspected.
Your due diligence should also include a thorough interior inspection. Look for any problems that will need to be fixed in the coming years. Watch for water or fire damage, or vector issues. Some fire departments will conduct a free inspection to verify the building meets current municipal codes. In short, leave no stone unturned.
The primary and most important result of a thorough due diligence is a smooth and uncomplicated inspection, financing and closing of the property. A secondary benefit will be your industry reputation. When you go to market with your next property, your track record will speak for itself, and investors will have a level of comfort with the information you provide. Finally, the seller and buyer should consult with legal and financial advisors to confirm due documentation is acceptable for either party.
Stephen Grossman is a senior vice president with NAI Capital Commercial Real Estate Services, Worldwide, and The Self Storage Investment Group in Newport Beach, Calif. He has been responsible for the sale of more than 850,000 buildable square feet of entitled self-storage land, and the sale or escrow of more than 3 million square feet of existing self-storage facilities. For more information, call 949.468.2394; e-mail firstname.lastname@example.org.