Brian Fielding of Fielding Investments knows that one of the biggest challenges that those who enter the commercial real estate field face is finding financing for their endeavors. Fortunately, there are many different options that are available to commercial real estate investors when it comes to financing. One of the easiest ways to finance an endeavor is to pick up a partner to go in on a piece of property together. It is important to choose a partner with experience and managerial attributes in order to ensure that your venture is a success! You can also get a large loan from the bank, which is a lot harder to do if you want to invest in residential real estate.Read More
Today we received a wonderful question from Tad in New Orleans who asked “Our investor group found a really nice retail property in a location that we think is going to become more and more valuable, but as part of our due diligence, our engineer warned that the EPDM roof [whatever that is] was nearing the end of its useful life. The seller tells us that we can put another roof on top of the existing one very inexpensively. Is that really true?”
As with most questions like this, there is no hard and fast rule. EPDM [properly known as ethylene propylene diene terpolymer] is arguably the most common type of roofing used for relatively flat surfaces and, properly applied, such roofs will be warranted for between 15 and 20 years. Available in black and white, EPDM roofs are made from oil and natural gas, and are applied in a variety of widths that overlap and are sealed with adhesives or specially formulated tapes. Properly installed and maintained, these roofs should provide excellent protection for your valuable asset.
However, there are many factors that determine the success that you will enjoy with your rubber roof. A poorly adhered seam or a puncture wound [oftentimes inflicted by careless maintenance persons who service rooftop systems such as HVAC, antennae plumbing vents, grease scrubbers, etc.] will leak and may often be hard to find and correct. Similarly if the roof was not professionally engineered, contractors will tend to find “shortcuts” that lower their bid or increase their profit with shortcuts that will likely be unseen by anyone other than roofing professionals. Keep in mind that standing water is the bane of most roofs, and a proper design will have slope of at least 4% … again somewhat dependent on the climate conditions in your target community.
There are innumerable variables that will determine the type of roof you require and to determine if, in fact, you can simply apply a second roof on top of an existing one [many communities do not allow this practice … particularly where the roof load has not been fully analyzed and deemed satisfactory to the new additional weight]. How the roof is fastened, to what weather standards it has been designed [for instance a roof placed on a building in South Florida will likely have to be able to withstand higher wind lift standards than in other areas of the country], the manner in which slope is provided [and to what standard], and the rating of the proposed insulation all are major factors in estimating cost and one should not assume that the company with the lowest price is the best value.
At Fielding Investments, we utilize professional roofing engineers to set the specifications for roofs that we require. The fee is often quite substantial, but we find that only the most professional firms will quote our jobs and we enjoy the benefit of knowing that all quotes that we receive are “apples for apples”.
With all but NNN leases, the requirement that the roof be leak-proof is borne by the Landlord … so we recommend that you have a roofing engineer inspect and advise whether the Seller’s suggestion that you can install a roof over the existing leaking one meets your local building code. Keep in mind that if the roof has leaked, there is a strong possibility that there will be damage to the underlayment, including insulation, wood joists, and plywood decks, to say nothing about one of the most troublesome environmental concerns of mold formation.
Good luck with your investment activities … let us know if your deal is successfully culminated.
Brian FieldingRead More
Dear Mr. F.
I have been trying to buy my first investment property and most people suggest I buy residential over commercial. Why do you favor the latter?
Perhaps it is a matter of personal preference, but for our investors, we have had the most consistent returns in commercial real estate. If you are seriously considering buying a multi-family home for pure investment, I would caution you to insure that you have no lead paint [or other environmental] issues and that you do the most extensive credit check on your prospective tenants. Removing a bad tenant can be a costly and timely proposition … particularly when the proposed eviction involves families. Further, if you fail to fully and completely remediate all environmental concerns, you may find yourself with a tenant who doesn’t have to pay rent until the work is completed using a full permit process and then reviewed by a licensed environmentalist.
With commercial tenants, there is rarely any significant emotional attachment to the process of removing them for delinquent payments and the courts tend to enforce contracts quite literally. Understandably, that may not be true when a judge hears tales of woe from persons who are going to losing the roof over their head.
Good luck with your search … let us know how things work out.Read More
Brian Fielding knows that many investors will balk at the word “contaminated,” oftentimes thinking that the property has been exposed to radiation, chemical issues or worse. While there are some of these properties on the market, the majority of “contaminated” properties pose no danger and can be remediated with a variety of new technologies over an extended period of time.
“The shrewd investor understands the legislation and limits of liability when investing in a contaminated property,” said property investment guru Brian Fielding. “There are real opportunities out there to make some huge gains with minimal exposure.”
Educated investors are rarely intimidated solely by the term “contamination” and often are able to purchase a property at a huge discount to the underlying value. Mr. Fielding recommends that persons thinking of investing in “environmentally challenged” assets retain an environmental professional and an attorney familiar with that state’s regulatory authority if they are considering purchasing properties with that designation.Read More