Purchasing First Commercial Property - Due Diligence Inspections?

[Derek Caffe]

I'm getting ready to purchase my first commercial property with seller financing. It's a commercial garage around 7K sq. ft. which was built in the late 1960's and will be used as a location for my car wash business. It also has a separate retail location attached to it, that we're looking to lease out. 

As we go through due diligence what types of inspections should I look to have done? I currently have two duplexes in my portfolio so I'm aware of the inspections in that situation, but not sure what additional inspections I should have done. Or are there other things I should look out for? 

Thanks in advance for useful feedback.

[Account Closed]

@Derek Caffe Aside from infrastructure , mechanicals , physical inspections , be sure to review the zoning/permitted uses and what you will need to bring to current standards if you are modifying it along with a survey and phase 1 inspection. That's some thoughts to get you started. 

[Derek Caffe]

Thanks @Account Closed, what kind of company typically does these types of inspections? An engineering company?

[Account Closed]

@Derek Caffe

You might find an engineering firm or property inspection firm that does commercial.  Just make sure they do commercial ( and have experience with your specific type of asset).  We do mobile home parks so we typically are not looking for one person to do a general inspection but we hire a plumber to come out check water/sewer/gas lines for a professional opinion , same with electric , or if there is roads that look kind of questionable, we will ask a paving /concrete contractor to look at it.  This way all specific systems that could cost big $$$ are getting evaluated by the people who know them ( and the plus side is we are getting prices to fix items if needed).  If its something unplanned or higher than expected, we can also use it as a negation tool.  If bank financing is involved, make sure if the lender is satisfied with your choice of inspection company/method (if they deem a report necessary). 

[Derek Caffe]

Thanks @Account Closed!

[Martin Z.]

environmental 

[Derek Caffe]

@Martin Z., I thought a Phase 1 inspection was environmental?

[Martin Z.]

@Derek Caffe  oops, i overlooked that. yes, phase 1. 

[Chet Mazur]

A contractor friend go certified to do on call inspection for the city/county and would do property inspections.

[Donald La]

I would also talk to your Title Rep and go over the Preliminary Title Report to make sure that the person who is selling is actually the owner. It will also have the property legal description and any exceptions to the title policy. Sometimes there are errors in public records (example: inaccuracy on a deed, unknown liens, forged documents, boundary issues etc). Always good to clear all that up before closing.