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Control Costs on Commercial Buildings

An inexperienced commercial real estate investor may believe that controlling costs is a function of getting the best deal from the two or three contractors that give you an estimate on a repair but to those of us who have driven costs on commercial property, it is more a function of getting value for your dollar.  This is where you need to be wise.  I am referring to the fact that a contractor will rip you off, no matter how nice, no matter how honorable the company.  It has happened to me over and over so I can let you know from experience that the single most important thing you can do to control costs on your investment real estate is become familiar with commercial systems.  I am not saying that you have to be a repairman but I am saying you have to acquaint yourself with the ways that contractors will knowingly and purposefully rip you off.

Remember the typical contractor will have an opportunity to sell their services two or three times a day on average.  They know what you want to hear and they know how to sound like it is only them who can give you what you want.  I wish that you could trust people to give you repairs for a fair price and that the problem would be fixed and never again an issue, it would make both our jobs a lot easier.

The largest repair expenses for most multitenant commercial buildings are the roof and the HVAC systems.

Have you ever called a repairman to fix the AC in your building and mysteriously 2 days after the repair is made another AC unit on the same roof breaks and you get complaints that it is hot?  That is some coincidence.  It is likely that the repairman disabled something in the other unit while he was on the roof so that you would call him back to fix the unit he disabled and he could charge you again.  Have you ever noticed that when the winter hits you get complaints that the heat is not working even though it was working perfectly the winter before?  It is a common rip off that when the AC repairman services the AC in the summer he turns off the gas at the roof to certain units so that in the winter time you have to call him again.  Do you have a monthly maintenance plan?  This is where they really get you, they just don’t touch the filters and belts and say they did and charge for the service or they will go to the filters and cross out the old dates with a pen and write in the new dates.  They leave access doors to electronic components open to the rain hoping the electronics will short out and they will get another service call.  They leave old compressors sitting on the roof which are likely to cause roof leaks.

Another HVAC issue is it getting cold in certain offices and not the others.  This has to be investigated including the diameter of the ducting going into the office.  It is extremely easy to replace computer or compressor parts to try to get this problem fixed but a cheap, one-time duct replacement might do the trick.

The fact is that most commercial property owners have not been on the roof of their building or up in the drop ceiling for years.  If you want to control the expenses on your building you have to be less of a target for a contractor rip off.  You have to secure the roof access door and all Air Conditioner access doors with individual key locks.  Add a video camera for the roof and watch the contractor while he is up there.  When the contractor completes his work go up to the roof and have him give you the old part that he replaced and show you the new part.  Make sure all debris is cleaned up from his work area, all gas lines are in the “on” position and that all the other units are locked down.  While you are on the roof inspect for cracks in the gunnels, metal that is not glued down or places where water might stand.  Show the contractor that you are not going to be a victim and you will see your costs will drop substantially.

Here are some quick tips for making the journey to the roof easier.

  • Hide a hat, flashlight and sunscreen near the roof access
  • Get multiple combination lockboxes to house keys for roof access and individual HVAC Units
  • Have appropriate ladder stored on property

If you go up to your roof and find a lawn chair sitting next to your AC unit and a six pack of beer cooling inside.  You may want to look at another AC contractor.

 

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