Investor · Greenville, SC · Member since 2016 · 163 posts · 108 votes
My partner and i are in the middle of due diligence on a 36 Unit Apartment building in Spartanburg, SC. In our opinion, there is tremendous value-add opportunity in getting 2 fire damaged units online as the owner decided not to put any more money into the complex a couple years ago and they have sat vacant.
Any advice on rehabbing these burned units, things to look out for, best practices?
I have rehabbed several units before but never fire damaged units. I have also included all images from inspection report for those that aren't familiar with the overall process...
If the building was built before 1978, you can be guaranteed that those fire damaged units are also asbestos contaminated. If this is the case, you have to get a professional remediation company to remove and professionally dispose of all contaminated materials. This can be pretty expensive, so make sure the purchase price takes that into account.
When you go for inspection, make sure your inspector really goes over those fire units carefully. There can be all kinds of structural issues in there.
Lastly, a landlord that just quits maintaining the property is an awful person to have to work with, but hopefully they understand the concept of deferred maintenance, how expensive it is to catch back up and are willing to sell the property at a price commensurate with this neglect.
If the building was built before 1978, you can be guaranteed that those fire damaged units are also asbestos contaminated. If this is the case, you have to get a professional remediation company to remove and professionally dispose of all contaminated materials. This can be pretty expensive, so make sure the purchase price takes that into account.
When you go for inspection, make sure your inspector really goes over those fire units carefully. There can be all kinds of structural issues in there.
Lastly, a landlord that just quits maintaining the property is an awful person to have to work with, but hopefully they understand the concept of deferred maintenance, how expensive it is to catch back up and are willing to sell the property at a price commensurate with this neglect.
Fortunately the building was constructed in 1987. We have negotiated several concessions based on the neglect of the property. I am hoping that the rehab doesn't entail any work outside of the scope of expectation. ( Fingers crossed )
@Linda Weygant what guarantees that a building built before 1978 contains asbestos?
Asbestos was put into literally every building product pre-78. Siding, flooring adhesive, insulation, popcorn ceiling texture, roofing materials - you name it, it was used. Asbestos was thought to be the end all, be all product for fire retardants for decades. And for that purpose, it really was great. Too bad it causes cancer when the particles are inhaled.
In a fire, all of the asbestos particles are released as a very fine dust which, when inhaled, can cause about a dozen different types of lung cancers and mesothelioma. Ugly diseases.
There are those who say that it requires continuous exposure to be harmful, but the EPA disagrees and states that anything that's been contaminated with asbestos has to be removed and/or cleaned by qualified, licensed professionals.
One of the biggest challenges you are going to have is removing the odor, especially considering the amount of time that has past since the fire. I find it amazing that someone would have left those two units in that condition, sounds to me like they gave up on this property years ago. If you want to practice due diligence it might be to your advantage to seek out a fire damage restoration company in your area and see if they can write a repair estimate for those two units (because fire restoration is not the same as remodeling). There will be a charge for this but if you are serious about this property it may be a worthy investment and there are fire damage companies that will write an estimate for you for a fee, I should know I have been doing fire damage restoration for over 20 years. You can also use the fire damage estimates to negotiate the selling price. Just a thought.