Page 145 - Trump University Commercial Real Estate 101

Ho w to Disco ver the Truth behind a Deal

A Phase II is a much more in - depth report. It determines exactly
the nature and magnitude of a problem, and the degree of risk
involved. Plan on lenders not moving ahead until the problem is
resolved.
Phase II inspections can run into tens of thousands of dollars,

never mind the remediation process to fix the problem. My point is
that you must always get the Phase I done on a property, so you ’ ll
never be left holding the bag on a deal that looks great when driving
by, but is a toxic waste dump down below.

Pest Inspection

This is usually done with apartment buildings, and the most common
pest is termites. They are in almost every state and can do major dam-
age to a property in short order.

Tag Along for the Inspection

You should be at the property when the engineer does the inspection.
This is a great time to get a good look at the major components your-
self, and to ask the inspector questions about the property. The good
ones will explain everything they ’ re doing and what they fi nd.
In an apartment complex, after the inspector examines the struc-
tural and mechanical components, he will do a survey of the units. That
means doing a spot - check of perhaps 20 percent of the units, looking
for substantial issues.
If the inspector fi nds problems, he will go into more units. If not,
he will stick with the spot - check.
On the other hand, you must go into every unit and inspect. In
part, you are looking for problems, but what you ’ re really doing is
getting a feel for the property:

• How old are the fi xtures?
• What condition is the fl ooring in?
• Do you see mold as a result of bad ventilation?

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