There are a lot of factors that contribute to the success of an income property, but some things can become a detriment to a building’s performance if not properly cared for.
These are Systems’ Top 10 Issues for income properties:
1. Poor Foundation
Being in the state of California, one of the most important things for any property – income-producing or not – is the structural foundation. Earthquakes are simply a reality in CA, one that can seriously jeopardize a real estate investment; so it’s exceptionally important to check for any indication that the foundation of a property may be faulty.
2. Cracking Floor Slabs
All concrete slabs on-grade shrink and often crack, even with cut expansion joints. Minor cracking can be easily fixed with the help of a contractor, more significant cracks and degradation, however, may require excavation and replacement.
3. Power Setup & Supply
Assuming the electric setup and power supply at the building is to code, updated, and providing sufficient energy to the building is a dangerous thing to hang your hat on. Having a trusted electrician who can confirm the state and efficiency level of the building’s electrical setup is more than worth it because the alternative can cost thousands to tens-of-thousands to correct.
4. Unpermitted Modifications
Walking into a commercial, industrial or residential space, the first impression isn’t always the most important. A difficult lesson to learn is that many of the renovations and “upgrades” you see inside – and even outside, sometimes – are unpermitted. At first, this may not seem like all that big an issue, but rest assured, the moment the City needs to become involved at your property – for any reason at all – is the day those modifications will cost you.
5. Damaged Walls
This is a tricky one. It’s obvious when there is aesthetic damage to a wall and generally speaking, surface-level damage is not a major concern. What is concerning is erosion from water run-off or poor drainage; visible bubbling on the walls indicating a possible leak, which may or may not be compromising supporting infrastructure; unpermitted modifications that are putting strain on support beams or that have led to the removal of support beams. Walls are the safeguards for a building; they need to be in excellent condition.
A bad roof makes for a flood of complaints and a failing investment. Never assume “out of sight, out of mind” when it comes to a roof. A good rule of thumb is to have a trusted roof maintenance team serving your roof twice a year. That said, however, if the roof has not been replaced within the last 10 years or if your area has experience harsher than normal weather conditions, an extra round of maintenance is worth it. Roofs are expensive to replace – costing anywhere from $4 to $10 per square foot and sometimes more. It’s in everyone’s best interest to make sure the roof is serviced with the utmost care. Additionally, ensuring that the roof is clear of abandoned equipment (HVAC units, etc.) or debris can help prevent unnecessary wear and tear on the roof.
7. HVAC Equipment
Like anything in property management, HVAC equipment doesn’t last forever. Something to consider on an income-producing property is first, how long the current HVAC equipment has been active; how often is maintenance performed; and how complex will replacement be. Something to consider is the simple notion that the higher the building, the more complex and expensive the update.
Often something that is overlooked in the perpetual California sunshine, weather proofing features on a building are key to the safety and success of the building. Weatherproofing isn’t just about having the right sealant to protect the interior of the building from water leaks on a rainy day. It’s also having cavity space, weep holes, proper drainage, and exterior sealant to safeguard the building’s integrity.
9. Parking Lots
It’s no secret that pavement in California can become a real mess. Depending on the building use, amount of traffic, as well as the type of traffic, accelerated wear can occur. The issue here is when the wear obstructs the actual use of the parking lot – like major cracking over the handicap walkway area or potholes that can potentially cause damage or accidents.
10. Parking Garages
Like anything else on a property, parking garages are susceptible to major damages from water. The reinforcing steel in the concrete starts corroding with water damage. As the corrosion worsens, the steel expands causing the concrete to crack and the damage accelerates. Accurate and detailed repair assessments and proper weatherproofing can limit the risks, but parking garages are important to manage preemptively.