Apartment building inspection help needed

[sepefrio]

I was contacted today to inspect a 6-8 dwelling apartment unit. This buyer is looking at several and hasn't settled on one yet and is just shopping right now. He contacted me through a personal reference from a previous client and said I get first crack at it.

So here are my questions.

OK the units seem cut and dry, but for the building as a whole is there anything special about it? I would just think the number of items to inspect is increased but it is the same as any other house.

Pricing - I didn't give him a price quote yet and to be honest I'm not sure what to quote. I currently base my price of my estimated time of the inspection itself and charge about $100 an hour. But a 6 or 8 unit building will probably take all day or maybe two? Then at least a full day to write the entire report (and proof and re-write, lol). So for something like this, what would be your price range? I do need to add a comment he made. Not sure how true it is, but it could be. He stated he and his son are looking to buy several of these units over the next 2-3 years and would prefer to have the same inspector every time. So if I price it right and add the quality job I will get some very good repeat business. But I don't want to screw myself and be stuck with it. For right now, the number that is sticking in my head is $1200.

Opinion/suggestions?

[jon_ran]

Make sure that you are not out of your scope of experience, knowledge, licensing and insurance. I know that there are several who do perform this type of an inspection, but in Indiana the home inspectors license allows us to inspect "residential dwellings". A building of more than 5 contiguous units falls outside the scope of my license and would require a P.E. This means that I can not even inspect one condo if the building consists of more than 5 individual units.

There are several issues with multi-family that you don't have with single family and you need to be sure that you are on top of your game. Some insurance policies also state no more than 4 units.

I know that there will be others on here who disagree, but here is the specific Indiana code than governs this situation.

IC 25-20.2-2-6 "Home inspection"

Sec. 6. "Home inspection" means a visual analysis for the purpose of providing a professional opinion of the condition of a residential dwelling and the dwelling's carports or garages....

IC 25-20.2-2-10 "Residential dwelling"

Sec. 10. "Residential dwelling" means a structure consisting of at least one (1) but not more than five (5) units, each designed for occupancy by a single family, whether the units are occupied or unoccupied.id="blue">

[kurt]

$1200 is about right. I've found apartments to be a relatively easy gig.

All the usual stuff, but pay close attention to bathrooms; they tend to get trashed in rentals. Same w/kitchen stuff.

Make up a checklist type page and use one for each unit to inventory and document conditions as you walk through.

The Indiana law is unfortunate. Like Jon said, make sure you're allowed to do these.

[hausdok]

Hi,

I typically do those by figuring the building's total square footage and the shell as one unit, than I add a set fee per additional unit. So, if the shell, including the roof and foundation, is 3,000 square feet and there are 4 units. I charge the same as I'd charge for a 3,000 sf house and I tack on the additional per-unit charge times 3.

As an example, say you get 15 cents a square foot and $100 per each additional unit, that's 3000 X .15 or $450 for the shell and the first unit. Now add 3 X $100 or $300 for your additional 3 units and you arrive at a fee of $750 for a 4-plex. Make sure you pay attention to what the electro-mechanical systems are in those additional units. If all of the units have electric baseboard heat and an electric water heater, they'll be easier and quicker to do than if they each had a gas furnace and gas water heater. For ones with gas water heaters and furnaces you could tack on an additional 50% to the set fee per unit. Also take into account whether they are vacant or occupied. Occupied units are a pain to inspect because tenants will hang around and almost never have the place ready for you. If they're occupied, also tack an additional 50% onto the set fee per unit. So, set fee for shell and the first unit, set fees for additional units based on vacant or occupied status and types of systems installed.

Just figure out what you want to make per square foot on everything then establish a set fee for those additional units. You won't have any problem coming up with a figure quickly that way.

ONE TEAM - ONE FIGHT!!!

Mike

P.S.

FWIW, when our licensing law here was originally drafted it defined a home inspection as 4 units or less. Somewhere along the line, that was dropped from the bill; so, unless the board that get's appointed defines an inspection that way in the RCW, there won't be any such restriction on inspectors here.

[kurt]

True enough. If there are individual mechanicals, it would mean an entirely different pricing structure. I was figuring central heating (hydronic) and water heating equipment.

[sepefrio]

Jon, Hrmm, thanks those are some questions I will get answered before I talk to them again. I'll check the law and call my insurance company. Especially the insurance, as I'm on a pay as you go program, would a 6 dwelling unit count as one policy or 6? lol Would make a HUGE difference in my pricing.

As for knowledge, thats why I asked. I know for a fact I can handle the units no problem. But as I never did a building as a whole, was just wondering if there was anything special. I haven't seen any of the properties yet, but I'm assuming they are just like the 4 unit town homes where I have done quite a few single units. I don't think it's really a apartment build per say, with a basement boiler for all the units. If it is set up this way, I think I may just do 6 individual inspections vice one big one. I'll get more info and come back.

Kurt and Mike, thanks for the input.

[hausdok]

Originally posted by kurt

True enough. If there are individual mechanicals, it would mean an entirely different pricing structure. I was figuring central heating (hydronic) and water heating equipment.

Yeah,

Around here, the typical apartment building has a either a split system type heat pump or FHA gas furnace for the common areas and the individual units have electric water heaters and electric baseboard or in-wall FHA electric heaters. Basically an enclosure with a kitchen, bath, receptacles, sub-panel, water heater, BB or wall heaters, windows, doors, walls, and ceiling.

Yung and I can go into an apartment and by the time I've pulled the cover off the sub-panel and replaced it, checked the fireplace damper and flue, and checked the water heater install, she's ready to walk me around and show me the loose/leaking surround tiles, dampness in walls or under floor coverings, seismic damage, windows and doors that don't work or are trashed, broken/cracked windows, water leaks, weak water volume etc. We can be in and out in about 15 - 20 minutes and on to the next one.

On the motel we did a few weeks ago, I prepared a checklist based on how those rooms were configured. She went with the motel housekeeping people and was in and out of the rooms in about 5-10 minutes per room. Most of my time is usually spent on the roof, shell, foundation, exterior, and common-use electro-mechanicals, attics and crawlspaces.

I'm dead tired tonight. I spent the past two days doing a 14,400 ft. behemoth. I feel like a rugby team has been stomping on me for the past week.

ONE TEAM - ONE FIGHT!!!

Mike

[Richard Moore]

I'm dead tired tonight. I spent the past two days doing a 14,400 ft. behemoth. I feel like a rugby team has been stomping on me for the past week.

Maybe you should have skipped the gym workout!

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Damn impressive looking place if I have the right one.

On John's pricing...Everything everyone has said makes sense. I guess I'd also want to know the client's intentions and needs. By that, I mean, is he planning on keeping it as a rental or does he plan to rip everything out and "remodel" the units for resale. For example...does he care if the kitchen appliances work and does he want me to report those.

[jon_ran]

Originally posted by hausdok

FWIW, when our licensing law here was originally drafted it defined a home inspection as 4 units or less.

When talking to a member of the board, I found out that it was supposed to be 4 units or less. There was a typo on the minutes of one of the meetings and when the notes were handed over to the AA that put the regs together it was entered as it was in the minutes and didn't get caught during reveiw prior to finalizing the regulations.

[jon_ran]

Originally posted by sepefrio

As for knowledge, thats why I asked. I know for a fact I can handle the units no problem. But as I never did a building as a whole, was just wondering if there was anything special.

I wasn't referring to the home inspector knowledge in general. When you get to units of this size, additional items come into play. Inspecting a 6-8 unit apartment or condo building is different than inspecting 6-8 individual and separate units. The basic plumbing, HVAC, electrical, roof, structural, etc. are pretty much the same. The difference is within the building envelope itself.

1. Was an attic firebreak required when the structure was built? If so, what was the required thickness? What kind of penetrations are/are not allowed through the firebreak?

2. Firewall requirements between units? Are penetrations allowed?

3. Is there a common area/entrance? Is it large enough to allow all occupants to escape in case of an emergency.

4. Is there an elevator? Are you qualified to inspect it?

5. Individual unit security? Is there an attic access in more than one unit? Is there a crawl/basement access in more than one unit?

Not to scare you away, but these are only some of the questions that you need answers to for inspecting a building this size. Try to think of all of the possible differences between a one unit building and multiple unit building and have answers for all of those before you arrive.

[hausdok]

Originally posted by Richard Moore

I'm dead tired tonight. I spent the past two days doing a 14,400 ft. behemoth. I feel like a rugby team has been stomping on me for the past week.

Maybe you should have skipped the gym workout!

Image Insert:

37.02 KB

Damn impressive looking place if I have the right one.

On John's pricing...Everything everyone has said makes sense. I guess I'd also want to know the client's intentions and needs. By that, I mean, is he planning on keeping it as a rental or does he plan to rip everything out and "remodel" the units for resale. For example...does he care if the kitchen appliances work and does he want me to report those.

Hi Rich,

No, the one I did was here.

http://intouchtours.com/listing.asp?idx=10581

John,

You've got good instincts. Trust them and you'll be all right to figure it out.

ONE TEAM - ONE FIGHT!!!

Mike

[Steven Hockstein]

I think there was a thread like this a few months ago. Check the past forums. There was a lot of good info.

[fqp25]

I've found it helpful to talk to the management company myself. Go over what I'll be doing there, make sure we're on the same page. One time this cracker jack management company, didn't have all the keys, and told me there was roof access. Of course the access was only to an attic space and not the roof. Luckily there was a tool rental close by and I had to leave and fetch a 40 footer.

I like to make sure every tenant gets at least 48- 72 hours warning, that way they have time to clean up, especially those cat litter boxes. In that time I check that particular municipality's website for amendments to the IBC or specific codes geared toward multi-family dwellings.

I always check external lighting. I have a client that I've done a couple multi-family inspections for. He stressed to me that the external lighting is something his insurance company looks at.

Frank

[Scottpat]

When I do an apartment type complex, 4-Plex, etc. I charge a base fee for the entire building or complex then I add an additional fee for each unit.

I have found that most investors will not pay more than $50 to $75 per unit. For this 6 unit complex I would add on a base fee of $350 to $500 and then the individual units. Before I quote a price I always go and look at the complex. I then email my quote to whoever and if they want to go with me, I tell them to sign and fax the quote back. The quote also states what the scope of work will be for the job. I have found that if you state the work on the quote that you tend to get the job over just spouting a price over the phone. It also keeps everything clear as to what you will be doing for the fee.

Keep in mind that you will be working around the folks that are living at the complex and you might not get into some units, bedrooms, bathrooms, etc. (you also state this in your quote/contract and let the client know that you are their only for this time and you will not return to inspect units, etc., that you could not get in.)

You usually do not have a great deal of time in the units. Most will have one and a half baths some might have two baths. HVAC system, simple electric panel, water heater, sink, stove, refrigerator, etc. All of this in less than in 700sf to 1000sf. If you are in each unit for more than 20-30 minutes you are most likely taking too long. But, then each inspection is different and you never know what to expect in investment inspections.

Investors are concerned with the major expense items and usually want an overall picture of what they are getting. Deferred maintenance items need to be addressed.

The key to any inspection like this is to find out exactly what the client wants and is looking for in the inspection.

[Les]

We have gone toward the simple picture and comment format with a simple one page letter of understanding of our work. Often we will attach a component summary; hvac, plumbing etc with an executive summary. We have gone toward becoming very simple reports for multi-family and most light commercial stuff.

Unless it is for a major corp, we offer them a set of protocols that we believe will suit their needs and desire. We use ASTM for corps.

[kurt]

Originally posted by Les

We have gone toward the simple picture and comment format with a simple one page letter of understanding of our work. Often we will attach a component summary; hvac, plumbing etc with an executive summary. We have gone toward becoming very simple reports for multi-family and most light commercial stuff.

Unless it is for a major corp, we offer them a set of protocols that we believe will suit their needs and desire. We use ASTM for corps.

Interesting. I'd like to see how you do it, because I think that's very similar to how I do it.

I know you liked the comic book concept when we talked about it a year ago. What software do you use?

Also, and this is just an informal poll, but....

Does anyone else wonder if Joe sits perched out there, just waiting to say something moronic related to professional society stuff, or is it more of a hit or miss thing?

[Scottpat]

Originally posted by jhagarty

Originally posted by Les

Unless it is for a major corp, we offer them a set of protocols that we believe will suit their needs and desire. We use ASTM for corps.

Obviously you are not a Member of ASHI as you suggest a recognition of ASTM standard....

Well, that sounds kind of childish.

[Les]

I can recall ever being guilty by Association.

We do most commercial jobs with regular old Word. I take a zillion photos and just sit and insert and comment. Nothing fancy. We do pay attention to the reading level and try to keep it at 9th grade level.

Joe, I am disappointed you made such a comment.

[hausdok]

Hi,

Since ASTM has had an accepted standard for many years for commercial structures, and one can easily argue that an apartment building is a commercial structure, I don't see why using the ASTM standard and belonging to any association would be a conflict. Once a national standard is established and accepted by the major stakeholders, it is what most folks expect. A bank or insurance company might very well demand a copy of an inspection report on an apartment building and insist that the buyer's inspector perform an ASTM compliant inspection and provide an ASTM-compliant report. Any home inspector doing inspections on commercial structures who doesn't recognize that reality isn't very well informed.

Maybe it's time to recuse yourself from any EW work, Joe.

ONE TEAM - ONE FIGHT!!!

Mike

[First VT Properties]

I've been lurking here for quite a while (learning a lot btw), I realized that I needed to make this my first post.

As an investor , I have purchased 5 properties in the last 3 years, 1 9 unit, 1 10 unit, 1 2 unit, and 2 single family properties. With the exception of the last 2 buildings, they have all been inspected by different HI's.

You didn't mention the square footage of the building, but a 6-8 unit building should only take the better part of a day to inspect, and I don't think that it should take more than a couple hours to write the reports (but then again, I'm not a HI). Break down the inspection into the individual units, and treat them like you would a condo inspection with separate, short reports for each, and then an additional report for the inside/outside of the structure and any common areas. Since most investors are cheap, and don't do work on things the tenants can't see, pay particular attention to deferred maintenance issues. Also, if the current owners allow pets, your nose knows, and make sure to note bad pet odors (urine), as ripping up carpet (and possibly sub flooring) can be a costly, unexpected repair in order to get rid of the odor.

As far as thinking about discounting your rates based on the investor's possible purchase of more units in the future - DO NOT DO IT! For all you know, he may be full of it, but more importantly, let your work speak for itself. If you do a quality job he will use you again, even if you aren't the least expensive. If you feel the need to offer a discount, offer it on the next job you do for him, this way you will not lose anything if he is full of it. When you think about the purchase price of a 6-8 unit building, $1,200 is not a lot of money to spend for piece of mind!

As far as what to charge, that all depends on what your market will accept. We've been charged several ways; based on the total sq footage, the # of units, or by the hour. Wait to give him a quote until he goes under contract. For all you know it could take him another 2 years to find the right building, and prices will change in that time. (it took us 3 years of looking to get our 1st bldg)

We have been fortunate enough to have found a HI who does great work, and have given his name and # to everyone we know who is in the market for a home. Our realtor was so impressed w/his work that he is now the only person he refers clients to. Is he the cheapest? Probably not, but then again, I don't know. When we go under contract I don't price it out, I make 1 phone call, and that is to Greg.

Don't worry about "killing the deal", the building does that all by itself. I'd much rather pay $1,200 to hear that the building is a POS, and back out, than pay $$$$$ and THEN find out that the building is a POS. Your work will speak for itself, and that will get you all the work you can possibly handle.

Evan

Originally posted by sepefrio

I was contacted today to inspect a 6-8 dwelling apartment unit. This buyer is looking at several and hasn't settled on one yet and is just shopping right now. He contacted me through a personal reference from a previous client and said I get first crack at it.

So here are my questions.

OK the units seem cut and dry, but for the building as a whole is there anything special about it? I would just think the number of items to inspect is increased but it is the same as any other house.

Pricing - I didn't give him a price quote yet and to be honest I'm not sure what to quote. I currently base my price of my estimated time of the inspection itself and charge about $100 an hour. But a 6 or 8 unit building will probably take all day or maybe two? Then at least a full day to write the entire report (and proof and re-write, lol). So for something like this, what would be your price range? I do need to add a comment he made. Not sure how true it is, but it could be. He stated he and his son are looking to buy several of these units over the next 2-3 years and would prefer to have the same inspector every time. So if I price it right and add the quality job I will get some very good repeat business. But I don't want to screw myself and be stuck with it. For right now, the number that is sticking in my head is $1200.

Opinion/suggestions?