Commercial Corner Podcast – Commercial Inspections


Welcome to Commercial Corner presented
by Greater Tampa REALTORS Commercial Subcommittee. This podcast helps
commercial REALTORS navigate commercial real estate by interviewing
professionals in the industry. I am your host Keianna “KC” Carty. Hello I’m Keianna “KC” Carty and I’m here today with Randy Noon from BPG Inspections and
today we’re going to talk about commercial inspections and how critical
they are in the commercial transaction. How’re you doing Randy I’m doing very
well thank you well I’m glad to cheer you with us today so let’s talk a little
bit about what’s going on in the inspection world anything new or any
noteworthy news articles or anything you want to talk about what’s happening? Randy: You
know I did have an interesting thing happen. It was a couple of weeks ago did
an inspection over in st. Petersburg on a commercial building and on the back of
the building it was probably building from the 50s or
60s occupied building and there are what’s called the main service
disconnect on the back of the building is where I can shut off the complete
power to the building and this particular building had old-style fuses
it’s a big cylinder basically that they put in between two contacts and one of
the cylinders was completely missing and what someone had done is taken a piece
of copper pipe and hammered it till it was flat and shoved it in to make the
two contacts taking the place of the fuse Wow so exactly Wow yeah significant
fire hazard. In addition to that one of the places in
this building was a computer place the software place developing software and
so they had all kinds of computers going on in there unprotected from surges and
and overloads and really a bad situation there that somebody had bypassed the
fuse with a flat piece of copper pipe so that was very interesting and that just
kind of talks about the some of the reasons to have a commercial inspection
I’ve done it’s I mean you know we never know we don’t know when we’re in some of
these buildings we never know we could burn down and we we have no idea and
that’s the reason why we have commercial inspection companies
once you tell us a little bit about vpg inspections so vpg is a national home
inspection company we’re actually owned by fidelity National Financial so we’re
one of the hundreds of companies that they owned on em to that family which is
great because as being part of a national company like that we have the
backing and the insurances 310 million dollars worth of liability any you know
insurance which is significant in the commercial world because there’s a lot
more exposure there for both of those liability and dno of missed items
potentially so that’s good to have that backing what a lot of people don’t
realize is things can go wrong and you need to have an inspector or inspection
company that can you know follow through or be protected if it was should arise
yes so I recently read this news article about these in residential world about
this family who trusted someone selling their house and then they got they
finally got finished with the purchase and all of a sudden there’s so many
things wrong with the house none of the work was permitted and they are at a
total loss and they put up probably about 280 I think 290 thousand dollars
on this house so we understand the importance of having an inspection on a
residential property what would what can you elaborate why commercial properties
need inspections prior to purchase sure you know really on commercial it’s more
elaborate systems bigger air conditioning systems more elaborate or
electrical properties and and systems so the more elaborate they are the more
expensive they are so a lot of people think just because it’s a commercial
building that it’s going to be maintained properly well that’s
commercial right not necessarily true from what my experience is you know a
lot of times there are things hidden beyond the public view so somebody
walking through a building and maybe it’s a business going on in there
and you look around in general and you say okay everything looks pretty good
but most commercial places are gonna have a drop ceiling and that’s where I
find that most of the things are going on up above that ceiling roof systems
are going to be much more expensive on a commercial building a lot
of times when depending on the building it might be changing use so a strip
center might have different businesses moving into it that when I was talking
about in st. Pete that I recently did the current tenants were going to have
to move out because whoever was buying the building was gonna change to use
completely the manufacturer things and so they’re gonna have significant
electrical changes that we’re gonna have to take place so not only finding the
fact that there was a fire hazard there but all of the electric to that building
was not going to be adequate for their needs in fact there were you have to go
all the way back to the power pole and pull in new service feeds and new panels
and new everything based upon the business that they wanted to put in
there so they kind of had that in mind but still I was able to have discussions
with them about how much of a change they were gonna have to make I don’t
know that they anticipated all of that and then looking again above the drop
ceilings and all the electrical in place it was pretty outdated so they were
gonna have to do significant electrical updates to that building and that’s it
thank you very expensive for people at Doreen I know I mean I would be beside
myself if I hadn’t do all that that’s the reason why we hire people like you
to tell us these kind of things right so what are some of the things that a
commercial inspector would be looking for were doing a commercial inspection I
know like food residential you would have a you know the plumbing and stuff
like that but I know it gets a little bit more detail and commercial just can
you just explain to us a little bit higher level on commercial sure that is
definitely a different animal and then a lot of it varies according to the type
of structure that it is commercial buildings can really vary so most
commercial we’re gonna do what we call systems in structure so the structure is
obviously the the building envelope the exterior walls and then a lot of
buildings are going to have a metal trust system or a roof structure
system inside it’s going to be a flat roof on most commercial buildings and
then all of the different heating and air conditioning electrical plumbing
systems commercial really doesn’t revolve much around the interior and the
cosmetics like residential does so we’re not going to talk so much about the
interior finishes because that has to do again with the business that’s going on
a lot of times that might change maybe it’s a restaurant and it just is what it
is on the inside kitchen equipment we don’t evaluate so again if we’re doing a
restaurant that’s going to be outside the scope of the inspection to look at
all the cooking equipment okay I’m going on in there a lot of
people don’t understand that about it so it really depends on the usage that was
right building so anyway commercial it can be anything restaurant retail the
size I wanted to talk about some of the examples of commercial inspections so
and I have done all of these including hotels from small little places to I did
a big multi-story hotel over on Cocoa Beach one time yeah so it was nice all
the air-conditioning systems were thrashed by the salt water it was like
nothing I’ve ever seen before very different apartments which can
range I’ve done entire apartment complexes hundreds of units all the way
down to you know a four-plex okay so those are all fall into that commercial okay you can have office buildings which
might be a high-rise office building that have multiple tenants in it I
remember doing one one time they did medical stuff that I had to wear a
radiation badge when I went into certain areas okay and then you might have like
single-use little doctor’s buildings and I do a lot of those where it’s you know
just a one single little building might have two or three tenants in it okay you
know one might be a doctor’s our dentist’s office or something in there
those are more like a home inspection really this style and type of use that
it is I’ve done retirement homes daycare centers and then you have the whole
industrial portion of it which can be is a basic open warehouse or a mixed-use
where it’s a business in the front where you can walk
to it but in the back they keep all of their parts or equipment say like you
could walk into a plumbing supply place and you might talk to somebody at the
front but in the back they have all the stuff that you can buy stored then I’ve
done an Auto Collision Center up done a tomato processing plant I mean it’s
right it can be a lot of different things
churches restaurants strip shopping centers that might have all kinds of
business operating in it and you know strip shopping centers can be really
challenging because of the the businesses that are operating at the
time you’re trying to do any inspection they’re there they’re trying to conduct
business we’re trying to do the inspection it gets interesting saying oh
the air conditioning units above your desk sir I’m gonna need you to move and
pull in my ladder and how open the ceiling panel and and get up because I
really like I was saying before the the interesting stuff is all above that drop
ceiling all the electrical wiring splices and all the stuff that’s been
done over the years it’s all hidden up in that area I have done closed
restaurants I’ve done a couple of open ones but a couple of close restaurants
then when I got up above that drop ceiling the amount of rat droppings up
there would shock you oh but that was an actual restaurant
operating there wow I heard too that that’s just a siren car because that I
was like wow I have eaten here before and I’m looking up in the areas where
nobody can see ya right so but these are all the things that you don’t know and
you need to know you know kind of commercial inspection and part of the
reason why we’re doing this podcast is to educate commercial Realtors on you
know there’s so how will bus this this side of the real estate industry is and
it’s all different there is no one thing that’s a like you know residential can
kind of be kind of similar and kind of mainstream but with commercial it’s just
totally different and it’s based off of usage and what they plan on doing it
within it so the reason why this is very critical you
know a lot of people think that just because it’s a commercial building that
it’s been properly maintained or they’ve had the licensed contractors come out
and do it but that’s not entirely accurate so that’s definitely not all
collisions are created equal either so what is like the average cost
surrounding commercial inspection so most commercial inspections were gonna
price out case by case we’re going to look at the type of property in the use
again if it’s a strip shopping center and it’s got eight businesses going on
in there we’re gonna have 80 air conditioning systems and ain’t
electrical panelists and you know maybe a couple of the units are making that’s
gonna be a little easier or they’re all occupied and we’re enough to work around
people and the business that’s being conducted at the time that might take us
some extra time on site but on average you can use 10 to 15 cents a square foot
as how we that’s where we start okay and then we look at the complexities of the
property and we may adjust it up or down according to those different nuances of
that property okay so any high items or things that we didn’t cover that you
would like to tell us for the greater good because this is we can talk about
this all day people just don’t really understand how complex commercial bills
really can be that’s the reason why you know we’ve talked about in other podcast
title we’ve talked about what was the other thing that we talked about
mortgage mortgage underwriting sorry yeah yeah this had a break right there
you know but anyway this is all of these critical components of why we you know
we’re doing this so that commercial real estate agents have the tools that they
need at least a starting point right so there are a few things I didn’t want to
touch on in that commercial bulletins can have termites too so definitely now
our company we do the termite inspections while we’re there okay but
definitely a lot of times termite is overlooked in a commercial building
anything that has wood components can have termites in it and that same
building over in st. Petersburg one of the units was vacant and there was dry
wood for my grass all over the floor in
several areas so I started poking at the wood and as I opened it up there were
actually live termites in wood that were ready to swarm that wings on them they
were ready to fly out at any point this whole unit was infested with dry wood
termites because they’ve been sitting vacant for a while but nonetheless that
something definitely to consider I also had one doctor’s office that in the
insulation up above this drop ceiling there was a carpenter ant nest right in
the insulation right over this doctor’s office now that doctor’s office had a
roof lead and because well it was a plumbing vent pipe for the sewer system
that was different never connected in the Attic from the time of construction
it was just going through the roof and it came down and stopped right there my
water had been just running in there forever
and there was all this mold going on and again it was right over a doctor’s
office so I do a lot of those because it they tend to be smaller buildings and a
lot more of them out there but other things that we can do there are pre
lease or exit inspections it’s called so a tenant might be moving in and they
want documented what the condition of the property is before they take
possession okay or they’re getting ready to move out and they want it documented
so that after they move out a landlord or owner of the property can’t come back
and and hit them for all these charges of something that may or may not have
existed or a property owner can protect themselves with a tenant coming in to
say I’m having an outside service come in and document the conditions of the
property before you take possession so then while you’re here if something goes
on we know what the baseline was I used the example you I don’t know if you’ve
ever seen the Trading Spaces TV show it was on The Learning Channel so years ago
when they came to town and recorded a bunch of episodes I did inspections for
them so this was it was residential but it was for a company so I inspected
every house that they did the Trading Spaces episodes before and after okay
because I documented because they had been sued for cracking driveways and
damaging people’s houses because they were a big company a big
target yeah so people weren’t happy with their rooms when it was done they’d be
like well I’ll get them I’ll sue them because I say they hurt they damage
something so I did those so okay and then other things we can do draw
inspections so if a building or properties being constructed or built
out then the bank has to give out the draws to the contractor and we can
document whether the work has been completed or not yeah cause you know the
contractor might say oh yeah that’s all done in the bank if they’re fronting
that money they want to know for sure that works absolutely been done nothing
so and then one other thing we can do is called a reserve study so we go into a
property and make sure that what their upcoming fees or expenses might be and
to see if they put away a proper amount of money say an apartment complex
they’re gonna need new roofs on buildings new air conditioning systems
are they stacking away enough money to meet the upcoming needs for big expenses
that are coming up why you teaching me a lot here today I mean I didn’t really
think bad commercial inspections were this robust but I mean this is this is a
lot of information to take in Wow and we can also do a DA inspections okay so you
know a lot of times again with the use of the property don’t want to st. Pete
I’ll you refer back to again because it was an older property but they were not
using it for people coming and going very much for the outside public and
that several stairs the bathrooms had skinny doors on them they were not
wheelchair compliant all of that was gonna have to be changed to meet the
American for Disabilities Act access so that buildings have to be completely
upgraded for all of those so that can be again a significant expense the new fire
and safety exit signs all of those that building did not have what’s currently
required so those are all things that will be looked at in addition to the
common areas parking areas you know those are things in a house we don’t
look so much at but again on a commercial building you might have large
parking areas drainage issues things that could be a significant expense to
them the they might not notice just looking at a
property oh yes this would be a great place for my business they get kind of
focused or get the you know not looking at the bigger picture
like we do wow this is I mean this is a very great conversation good topic to
talk about because again it’s just so many things I have a whole new respect
for inspectors now I mean I feel like some time when I go into certain homes
that you know the inspector has to get up in the attic and have to see
different things and just looking at the condition of the home but then when you
start talking about commercial and how much more you have to do and like you
said a restaurant with rat droppings and you have to actually go up there and
look for those things I mean it kind of makes you I have all new respect for you
guys so thank you you know and you talk about residential versus commercial
difference like that on a house yes you might have to replace a new roof and it
might be ten thousand dollars for the roof right the commercial building if
the roof is shot you could be 30 40 50 thousand dollars or more for a roof on a
commercial building commercial heating and air-conditioning systems it’s not
like a little residential system it could be a ten-ton system and sometimes
if as super elaborate electrical or air-conditioning systems we eight may
actually bring specialists with us okay because some of those are even beyond my
knowledge and so fast super complicated systems we may bring somebody with us to
specifically inspect those systems value a different vpg that’s right wow that’s
good to know so is anything that we wanted to talk
about outside of that we did not cover no stuff that I wanted to talk about you
know if anybody definitely has any questions my information is out there if
you just google Randy noon you’ll find me yes because every time I have to look
for your number I always have to google google you I should just lock you in but
I thank you for coming in today and having this conversation with me about
commercial inspections i my mind is blown a little bit here about how the
need for a commercial inspection you know some people they really do go
straight to the tractor and say the contractor did it
all but we really need to hone in on commercial inspections to help mitigate
the risk when doing commercial transactions and this is exactly why
this podcast is so critical because we need to educate our eight agents of
Realtors or members that are going into commercial real estate or doing
commercial real estate to use the proper people to get things done so I thank you
for coming today I really thank you for your time and all of this knowledge and
information we have to do this again thank you so much

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