The basement is not a recreational area, any damage caused to the property mechanical operating systems (plumbing, heat, electric) caused by using the basement as a recreational area will be the financial responsiblity of the tenant. 

The smell did not show up until the inspector came and started to put the mechanical systems through it's paces which is what prompted my further investigation.In the future, on properties that have well and septic, I'd likely do that due diligence before bringing the inspector in and spending the money.Since, on this property, we didnt know if the well/septic would be a deal killer the inspector did all his normal inspector stuff.. checked out the entire electrical system (boxes, gfci, etc..), Boiler/water heater inspection, foundation, roof, ventilation, sufficient insulation, fire saftey issues, etc..  

Mechanic liens?

Like something with all older mechanicals like galvanized lines, federal pacific circuit breakers, two or more layers on a roof, an old boiler system etc..The more of these issues you add up the more risk you take on. 

To clarify, I wanted to do this myself so I can have a much deeper understanding of the mechanics of a Cost Seg study and RE taxes specifically.  

They’re just looking at the mechanicals.....Roof, Electrical, Plumbing and HVAC....standard inspection for all policies.  

As a general rule, anything mechanical electrical plumbing or structural requires a permit.

.- Load bearing masonry (brick) with wood framing with a stone foundation-10 ft. ceilings, plaster and lath- It will need all new plumbing, mechanical, HVAC, etc... a full rehab. - I am thinking of 8 total units, 2 per floor. 

I let people factor their own CAPEX budgets based on the ages of major mechanicals and the tier of replacement they choose.  

Are your utilities and mechanical systems separated?