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Tips for Investing in a Commercial Property

The high-income potential, tax benefits, and volume of opportunities make commercial real estate investments ideal for many people. Making a sound decision on your purchase includes getting an inspection. A commercial building inspector will look at the interior, exterior, and major systems of the building. However, not having a separate sewer inspection is one of the most costly mistakes made by real estate investors. Sewer inspections can save thousands of dollars.

What is a sewer inspection?

A professional inspector will insert a flexible borescope camera into the property’s main sewer line to inspect otherwise invisible issues. This is a service that is not included with a general inspection. The camera is guided into the sewer line, which drains the wastewater from the home into the sewer system. The inspector will check for cracks, roots growing through the pipes, and other potential issues. The entire process is recorded on video and a report will be delivered with the inspector’s observations of the condition of the sewer and include recommendations.

Why is it important for commercial investors to get a sewer inspection before purchasing property?

  • Estimate Repair Costs: Not all sewer issues are expensive. Knowing exactly what you are getting into with your potential investment and how much it will cost to repair is necessary in making a decision to move forward with the purchase. 
  • Determine Responsibilty: If there is an issue, the inspection can help decide if the repairs fall within civic jurisdiction or are the responsibility of the owner. 
  • Negotiation: Knowing the cost of repairs can be used in negotiating the contract. Major sewer repair can be more than $10,000 and could be a significant portion of the total cost. 

Usability of the property and additional costs: Major sewer repair takes time and can destroy landscaping. For a commercial property, this is a critical concern. If your income-producing investment is out of commission while repairs are being made, this needs to be a consideration. Landscaping is also time consuming and expensive. This information needs to be a part of your negotiations and ultimate decision in investing in a particular property.

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