Estimate the Costs of Correcting Deficiencies

Site, Mechanical (HVAC, Electrical, Plumbing, Sprinkler System), Structural, Roof, Interior, Exterior, Life Safety
March 30, 2016
Estimate Costs for Anticipated Major System Replacement
March 30, 2016
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Estimate the Costs of Correcting Deficiencies

One of the main reasons  PCA testing is conducted on a building is to produce accurate maintenance and future capital costs. Your commercial building consultant supervises all their teams..These specialists carefully inspect and produce reports of their own. Cost estimates are at the very top of the agenda for the property investor and the lender.

If the investor is interested in purchasing a new commercial building, the lender pays very close attention to the PCA reports. These reports and the financial investment that the buyer is willing to spend on fixes and improvements tell the lender a lot about the buyer.

When a commercial building is refinanced, these lenders have PCAs done to get an accurate indicator on how well the investor treats his or her assets. If the building has been taken care of and there is consistent maintenance that has kept the commercial building in tip-top shape, then they will be happy to refinance.

As you can tell, there are costs involved at every stage of this process: from hiring your commercial building consultant, to conducting a thorough set of PCAs, to paying all of your teams for their expertise and fixes. Of course, all of these costs depend on the size and value of the property involved.

Other factors that can influence cost include the scope of the work, the turnaround time, the age or type of the building, and the size of the associated parking lots or grounds. Its common for a fairly small commercial building holding several units to cost a few thousand dollars to conduct PCAs. Larger buildings can cost  anywhere between $25,000 to $50,000.

To estimate the cost of the potential buildings deficiencies, your commercial building consultant must trust the expertise and advice of the contractors they hire. All of these reports will be collected and analyzed, based on the advice each contractor has given for fixes, improvements, or system replacements.

Obviously, if an entire system needs to be replaced, that will cost the most money. This is why property investors and lenders need to be aware of the kind of building that they’re buying. If they ignore these hidden costs, then they could end up spending way too much money on a building that sold for cheap but ended up costing them millions.

The bottom line is that buying commercial property is pure business and it just doesn’t make good business sense to buy a building that is going to cost a fortune to fix or improve.

 

While it’s important to fix deficiencies, the property investor will also want to know what to do to improve the value of the property by making internal and external physical improvements over time.

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