What would you pay to uncover hidden problems at a potential investment property? Would you pay $10,000 to discover a $500,000+ problem? Real estate investors can find out crucial information about an asset by having a Property Condition Report done. A Property Condition Report, akin to a commercial building inspection, is an evaluation of all improvements at a property including the building and building systems.
Property Condition Report Scope of Work
The Property Condition Report scope of work can vary significantly depending on who’s ordering it – a lender may not need the level of detail that a buyer would require. “Debt-style” PCRs normally follow the ASTM E2018 standard scope of work, which includes a walk-through inspection of the asset by an experienced commercial building inspector, architect or engineer, interviews of relevant personnel, and review of available records. The data is compiled and used to create two important schedules: 1) a schedule of Immediate Repairs necessary due to failed systems, systems being past their useful life, and/or building code violations; and 2) a Replacement Reserve schedule that will estimate the remaining useful life of major systems and provide an estimate of the replacement cost at that time in the future.
Read more...GlobeSt.com - Property Condition Reports: Spend a Little to Save a Lot - The Science of Real Estate Article
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