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Property Condition Report Short Comings | International Residential Real Estate Investors Association
Monday January 22nd 2018

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Property Condition Report Short Comings

Lenders require and rely on the property  condition report because in concept this report should identify  all immediate  requirements, establish needed reserves, and either support or debunk the  purchase price of the asset on the basis of physical status.  Unfortunately, as investors making this  assumption is risky.

First, the report  writer will not have actual sources bid required improvements and therefore estimates of costs are often useless.

Second, the report writer normally does not actually  physically  inspect each and every item individually relying on samples.  This can lead to large oversights.

Third, the report writer’s  skills are not normally as global as the report will require.

Fourth, the report writer does not have your vision of where the project will go which weakens the product.

Fifth and possibly most important, the report writer’s cash is not on the line.

The prudent investor will therefore rely on a physical inspection of each and every unit, building, amenity, and grounds item (if I’ve not been clear, the investor will physically inspect every item).  If the investor is unable to do this, the investor should use every available means to gain as comprehensive of understanding of the asset as possible and discount significantly for this handicap.

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