Blue Dirt
Blue Dirt: Commercial Property Investing delivers expert insights and strategies for building and managing a successful commercial real estate portfolio. Whether you're a seasoned investor or just starting out, this podcast uncovers market trends, financing tips, and key investment principles to help you thrive in the industry.
Blue Dirt
Walking Properties Like a Pro
Ever wonder what separates amateur property tours from those conducted by seasoned commercial real estate professionals? The difference could cost or save you thousands.
Walking a commercial property with expert eyes means spotting the subtle warning signs most investors miss. Water intrusion—the silent destroyer of commercial buildings—leaves telltale traces that trained observers can identify immediately. From discolored brick and buckling flooring to swelling baseboards and stained ceiling tiles, these indicators reveal potential issues hiding behind walls and above ceilings that spreadsheet analysis can never uncover.
"Water is going to be your biggest challenge and typically contributes to the most real issues and real cost in a building," the hosts explain, emphasizing why bringing specialized moisture experts during property evaluations can be game-changing for long-term investors. Unlike fix-and-flip strategies, those planning 20-year holds benefit tremendously from early problem identification and resolution.
Don't be fooled by cosmetic appearances. The podcast reveals how seemingly minor issues often indicate larger problems—like electrical panels nearing capacity, HVAC systems requiring replacement, or drainage problems causing foundation damage. It also highlights valuable features worth finding: fire suppression systems already installed, excess land for expansion, grandfathered signage, ADA compliance features, and those coveted high ceilings that increase property desirability across all commercial categories.
This episode provides practical guidance for every commercial investor—from reading manufacturer labels and calculating system ages to converting lighting systems for immediate ROI and properly documenting property conditions through photographs. The hosts share wisdom gained from years of experience, including the best times to visit properties (during rainstorms!), what professionals to bring along, and how to distinguish normal wear from concerning defects.
Ready to walk properties like a professional investor? Subscribe to the Blue Dirt podcast for more insights that help you build smarter, invest wiser, and create long-term value in commercial real estate, one solid foundation at a time.
Learn more about Blue Commercial Properties on our website.
Welcome to Blue Dirt, the podcast that digs deep into the foundation of commercial real estate investing. Unlike most real estate shows that focus on dealmaking and market trends. Blue Dirt gets into the nuts and bolts of what truly builds long-term value the building itself. We break down how to spot deferred maintenance before it costs you, why a solid preventative maintenance program is a game changer and how triple net leases can maximize your investment returns. We'll also explore the importance of strong landlord-tenant relationships and how they drive stability and growth in your portfolio.
Michael Carro:Whether you're a seasoned investor or just getting started, blue Dirt gives you the practical knowledge to make smarter, more profitable decisions in commercial real estate. It's time to get your hands dirty and build value from the ground up. Let's dig in. Welcome to BlueDirt, where even idiots can make a killing in commercial real estate. Today's topic is how to properly walk a property. So what we're going to talk about, the questions we want to answer today, are what separates a casual property tour from maybe a more professional property tour, and then what red flags, hidden opportunities and key systems should every investor evaluate during a site visit? So, without further ado, donnie, what are you about to?
Michael Carro:say I didn't want to press the button without further ado. Donnie, are you about to? I didn't want to press the button, okay, uh, yeah, we are. Uh, listen, we are stepping up the blue podcast, our, our, our, uh, programmer. No, what's it called? Who's the person behind the scenes? Who's what? Do we call you our producer?
Michael Carro:our producer, that's it our producer gave us this little tool, and so we are going to amplify. Well, we're going to first F it all up, but then we're going to amplify and make it fun once we figure it out.
Donnie Redhead:But we'll overuse it. Yeah, we'll abuse it.
Michael Carro:We'll overuse it to start. Yes, you know.
Donnie Redhead:Yeah.
Michael Carro:So we got sound effects. Blue Dirt Podcast is going to the next level. So we're excited, and we know that you are too. Listen, don't forget to like and share and subscribe to this podcast. We greatly appreciate that. So let's kind of get into it. Why does walking a property matter? So you're going to do so much from your home office and where you're going to underwrite the property and you're going to create these amazing spreadsheets, and eventually you're going to do so much from your home office and where you're going to underwrite the property and you're going to create these amazing spreadsheets and eventually you're going to say, yeah, this property works, but the spreadsheet can only be driven so far. You really got to take yourself to the physical asset and then really walk it, understand it, feel it, love it and, quite honestly, if you're like us, you're going to obsess over it until you actually close Right. And so, don, why don't you talk about since you are the main facilities guy why don't you talk about the things that you look for in a property when you're walking it?
Donnie Redhead:Yeah, it seems like when we first, when you're walking it. Yeah, it seems like when, when we first, I'll say, get kind of a proper maybe even it's before it's under, it's under contract, when we first go out there to check it out, I think we really have kind of two different things going on simultaneously. We have the walkthrough that we maybe the space is pretty close to what it's uses, but a lot of times we're looking at it what is the highest and best use? So there's that kind of walkthrough, and then I'm in the same time.
Michael Carro:I'm going to pause just because we likely are going to have people who are familiar with residential properties. Right, right, listening, yeah. And so when Donnie says highest and best use, if you're buying a residential property, it's always going to likely be a residential property. You're going to buy it as a residential, you're going to lease it out to people who are living there as a residence and then eventually, when you sell it, you are going to sell it as a resident. Commercial's different. We have a lot of different silos that commercial properties can fall into. So we could have a building that's currently being used as an office space but it's on a main road and maybe a higher use could be a retail space or a restaurant. So we can change the type of uses depending on zoning and there's a lot of other factors. But that's what Donnie means when he says highest and best use, cause we sometimes will manipulate the use and get it to where there might be a higher demand.
Donnie Redhead:Okay, so I'm sorry, go ahead Obviously translates usually to more money, right? Right, like you're saying, they may have built the building originally for office and office in that area is maybe pulling, I don't know. Just say, for number's sake, $10 a square foot, but retail in that area is $15, $16 a square foot and you can just flip of a switch. Here we go, we have retail. Of course there's certain zoning things, but you're more familiar with that. The second thing is when we're going through the walkthrough and, like you're talking about, that I tend to focus a little bit more on is what is the condition really of the building? What does the structure look like? What is the roof? Are there roof leaks inside? Just how is the building look?
Donnie Redhead:And I will say, when we first started doing this I think I assumed most things were normal wear and tear. That kind of surprised me. You just kind of walk through the building and you're just, you see issues, but a lot of times you just think that that's normal wear and tear and usually it's not. Usually it's an underlying issue of something greater. So if you see something that just looks like it's not right, there probably is something that needs to be further investigated and I will say, on that point, one of the primary issues with buildings is water.
Michael Carro:Absolutely, water is going to be your biggest challenge and typically, I think, contributes to the most real issues and real cost in a building. Now, of course, you have building systems roof, mechanical, electrical plumbing but water, water intrusion, water leaks, water coming up through the foundation. I mean, donnie, you chase this stuff all the time, and so one of the things that I'm going to praise Donnie for this is one of the things that he does a great job at is when we're looking at a property does a great job at is when we're looking at a property. He brings in a lot of professionals. You know we have so much knowledge but we're not professionals into this area and that area. We're not professionals in everything. What we do we do really, really well, but the one thing he does other than the MEPR mechanical, electrical plumbing and roof he typically will bring in a water expert. And so let's talk a little bit about the water expert, because very, very few people I ever see bring in water experts. Talk about that.
Donnie Redhead:Yeah, and sometimes it may not be visible, right, there may not be a real visible issue. I'll say some of the red flags outside of your normal. Yeah, you can see roof leaks, right, you can see that that's causing an issue. One that was pretty interesting that we had just looked at was, you know, exposed brick is all the rage. Right, you get inside the building and if the brick was chalking or sweating, that could be an issue, because it shouldn't be doing that on the inside of the building. There could be other factors why it's doing that, but one of the most frequent is painting incorrect kind of paint on the outside of the building.
Donnie Redhead:Other things that you're looking for a lot of times is the flooring. Is the flooring starting to buckle? If it's wood, right, I mean, we don't see that that much. But even with LVT, you can see where the LVT will start to curl, where the glue is breaking free. Baseboards that's another red flag. You can see the swelling right on the baseboards, on the walls. Usually that's because there's moisture. Usually that's because there's moisture. So, yeah, as you're walking through, it never ceases to amaze me. When we bring him there, he looks at this property. Within seconds he's just there's issues, there's issues, there's issues, and a lot of people, I think, are afraid to know that information and he understands that He'll go through this. He goes. You guys probably hate calling me. I go. No, no, we love calling you.
Michael Carro:Just don't expect that we're going to fix everything immediately. Well, and the other reason why it's important to us is we're not flippers, so we plan a 20-year hold on our properties. So it's better to fix water issues and real issues now. Don't bury your head in the sand, because it's going to get you at some point. And so if you operate with a long-term hold in mind, like we do, then you want to know these issues, because if you catch them early, yeah, you might spend a little bit of money now, but it's a lot better than a lot of money later. At least, that's my philosophy.
Donnie Redhead:And it's like it's a classic. It's a little money today, but it also may be no money today. Right, you may just go listen. I only have this much money today that I have to do X, y and Z. I may be having to do the roof, because that is the biggest contributor, say, in this example of water issues, but at least you know about the other stuff. You know about it now and you can start developing a plan for it and budgeting for it today.
Michael Carro:We're under contract for a property right now that has significant roof leaks in one portion of the building. That has significant roof leaks in one portion of the building. It's the corner of the building and it looks like it's been like this for years. We haven't closed on it. We actually closed on it at the end of the month and we already have the roofer lined up. Now this needs roof work Probably replaced, not a big section, probably only about an eight by eight section of roof, and we're going to do a repair job at this point in time about $15,000. But then we're going to go inside the building because you have to create a sealed envelope of the building first. You got to make sure that no more water. So there's no reason to start fixing anything on the inside, at least in this example, until you have a good sealed envelope. Sealed in this case is we want to, we want a dry roof.
Michael Carro:Then, once that happens, then we'll go in and dehumidify the. It's a two-story building and the water was going all the way down into the first floor. So between the first and second floor there's a section probably a four foot by four foot section that we'll have to replace some decking or scab it in Not a big deal, you know, not a hard, complex job and then you dehumidify the area. So Don will bring in some dehus and make sure that the moisture content is low. And then you dehumidify the area, so Don will bring in some de-hues and make sure that the moisture content is low, and then we will go back and clean the walls and kill any organic material that may or may not be there. You know, we just kind of like to go overboard and then it's done. It's not that it's a big deal, but then we can work on putting the gutters up and then if you're going to do any, any interior work, that's when you would do it.
Donnie Redhead:Yeah, yeah, sealing the envelope is the right, right, right call.
Donnie Redhead:So making sure that you're not.
Donnie Redhead:You're cutting out the root causes, whether it is the, the, the, maybe the brick isn't sealed properly, maybe the roof is bad, whatever it is, doing those things first before you go down the line.
Donnie Redhead:It really depends on your level of expertise, because you can, if you're getting into a building where you're a bit uncomfortable and you've not done this before, you know, bringing in one of those moisture meters they have those simple moisture meters that are, you know, 30, 40 bucks you can get a bit more extreme. You can bring a thermal imaging and sometimes we do that get in there and start scanning it, because you'll be able to see those kinds of things, uh, using those kind of tools. But, yeah, it all depends on where your comfort level is. You know, bringing even just a flashlight, getting in there, and just just so you can see, because a lot of times we get there and the, the building doesn't even have power, right, right, so, um, so, yeah, that moisture is always, always a huge, huge thing here so then you know you're also going to look at the building systems.
Michael Carro:Talk a little bit about this is not when you have the inspectors go. This is our walkthrough. So you take a quick glance at mechanical electrical plumbing. What are you looking at Just from a casual, quick, non-professional standpoint? But as professional investors we look at it and then we ultimately hire the professionals to go the deep dive. But from your perspective, when you're casually walking this property, what are you focused on? On the mechanical electrical plumbing and roof?
Donnie Redhead:I'll say the layout right, because there's some we get in and maybe there's not enough AC for the whole space. But who knows, right, we don't know what we're going to do with it yet I'll go look at the units. Does it look like it's, you know, newer in age, right? A lot of times they'll have the sticker on the side and you can tell the age of the unit or the type of quant cause it's labeled right there.
Michael Carro:So just right away, easy, look at that and you know, I'm guessing that this will be a factual statement, even though I'm making it up, I imagine if you took a photo of that and then entered it into like a chat GPT it can spit out the information.
Donnie Redhead:Right have you done?
Michael Carro:that I have, okay, so that you don't have to be an expert on being able to read that label. The label has valuable information. It'll tell you the year it was made, the month it was installed. It will give you a lot of information, if you allow it.
Donnie Redhead:Yeah, just take that and do it. That's exactly right. I have done that before. Other one, too, is I'll walk right to the electrical.
Donnie Redhead:Look at the panels. One of my things that I look for is how much, how many spaces are in the panel that actually don't have breakers. It's usually a good sign if there's maybe a third of it 25%, whatever that are vacant. You can tell that maybe the building isn't at capacity, right. You can tell that you get more complex, right, but that's just a good. Hey, I walked in, I looked at the panel. It's not being overloaded, so I know that there's room for some power, if you had somebody come in looking for power. Another thing, too, I'll look at a lot of times is the ducts, um, where the registers are. If there's a lot of, uh, kind of humidity, mold around them, if you all granted matter, whatever, right, that tells me that there could be another issue there. Yeah, maybe there's. It's pulling in. It's pulling in humid air somewhere, so there may be a little bit of an issue, uh, with that I want to.
Michael Carro:I want to talk a little bit about mold for a second. Um, there is a lot of people out there that will try to scare you about mold. You know there are some molds that are absolutely horrible, but the most of the molds that we deal with and really what is mold? It's just. Mold is everywhere. You have it everywhere, it is everywhere and most of it we have found not to be a big deal.
Donnie Redhead:And that's why they do a. When they do the testing, they test outside. So when they're, when they're putting together their analysis, they have to do an outside test and most of the mold tests we do they come with higher mold outside. So I mean they have to have that we live in Florida.
Michael Carro:We're in a humid area. There's just mold is a naturally occurring thing, but but these, these companies will try to scare you and don't fall for it. Now, when you see something on the wall, it probably is mold, but it doesn't mean that it's a super harmful mold. A lot of the molds can be simply cleaned bleached. You know, kills, k-i-l-z. You know the paint over it. I'm not a mold expert. I know that that when we have done a lot of different testing, I don't know that we ever at least I can't remember a time where we ever had had a mold that was oh my god, this is, this is the really harmful black mold I don't know that very, very infrequent, I mean of you've done it more than me, but yeah, yeah, yeah, of course, probably of all the times that we've ever done it.
Donnie Redhead:I mean you're talking less than 10%, probably less than 5% of the time that we've gotten back. Usually, the indicator that you're when you find the issue that it's there's going to be a problem, there is when there's been a long term, and when we first started doing this they explained it to me. The bad kind of mold comes when it's just a constant drip, drip, drip, drip. Okay, if the space just gets wet and dries out, there's usually no issues. And that's where, a lot of times, I mean we're getting so maybe something that's been ignored. Yeah, if you, if you have gotten it wet, the space has gotten wet and then it hasn't had a chance to dry it out, you've just ignored it, then that's where it will begin to to form yeah, let me ask you this on the that five percent that you've identified, as I'll say, bad mold, was it fixable?
Michael Carro:and if so, what do they do?
Donnie Redhead:usually what they'll do is contain the area and they'll cut it out, um, like maybe a drywall. Yeah, usually it's been on drywall and typically it's been in a in a non-conditioned space, usually where maybe a water heater is. The water heater had a little bit of leak, a little bit of leak in a closet. They get in there, you open it up. It's not conditioned and it's just had that little bit of drip. You get in there. You have one of the groups like a pro clean is one we use here locally all the time. Uh, serve pro. They'll get in, contain the space, cut it properly, remove it and then you get back in there.
Michael Carro:Okay, it's really not so. It didn't infect the entire property. It's just a very contained area, okay, so so just don't be alarmed by that. A lot of times these are fixes, um and but on a regular, normal mold situation. How do you remedy that?
Donnie Redhead:on a regular uh there's. There's really nothing to do.
Donnie Redhead:I mean, you can get through if you maybe have a small yeah, if you have like, maybe a sour smell, the mold smell, if you will, we'll go through and just get the carpets professionally cleaned, clean the space. Maybe we'll clean the duct, replace some of the filters, go through there, that's. That's about the extent and a lot of times that is more of a smell related. And even after we have the testing, the testing will show up negative almost every time. But the tenant's just it's bothering them so we'll just clean it.
Michael Carro:Sometimes it's a little psychosomatic, yeah, most of the time. And I will tell you, this is something that we've done, because occasionally we'll have a tenant who is maybe hyper nervous, okay, and they will say we have mold and you know you need to fix it, and what we typically would do is say, hey, listen, we're happy to do a test. However, if it comes back negative, you have to pay for it. You know, I mean, I'll do whatever a tenant wants, um, and if there is something wrong, we'll raise our hand, we'll take care of it, no problem.
Michael Carro:But but if you are just, sometimes we'll have tenants that would just, you know, constantly raid, raise red flags and there's a cost to us in the sense of every time somebody goes out and maybe is chasing their tail. That really doesn't work. Now, if it truly is a problem, we will take care of it and that's just how it is. But there's many times, so that's just maybe a strategy that you can employ and say, hey, no problem, we're happy to do it. Many times, so that's just maybe a strategy that you can employ and say, hey, no problem, we're happy to do it. But if it's just something that you want done, then it's.
Donnie Redhead:It's on your cost yeah, we've done it that way many times hey, come and spend the money, get it done. And after two or three times we were like hey, we're happy to coordinate this, but it really has to be at your expense. And you'll find a lot of times they stop.
Michael Carro:Well, a lot of times it's a. It's an actual big company that has a lot of employees and you know a lot of people are just have nervous Nellies and um, and so you have to accommodate them because they're it's a great tenant to have. But when, when they have a lot of employees that can just pick up the phone and they've kind of given carte blanche, then they sometimes can get a little unruly.
Donnie Redhead:And fortunately now the biggest thing that you can do when you just walk in, you can first see. A lot of the new buildings have smart thermostats that tell you the humidity on there. If you're pushing in the 70 plus percent, that's when you're going to start seeing.
Michael Carro:Oh, is that right, the building? Okay, I had no idea what the percentage where it was. Yeah, when I, that's kind of a fast can you?
Donnie Redhead:adjust uh a uh a thermostat to reduce humidity no, that's really there's something wrong there if they're, if it's not pulling the right humidity, like when we had when we were talking about hvac's, that's there's something wrong there. If it's not pulling the right humidity, like when we were talking about HVACs, there's really a different issue at play. But if you walk in, just a quick look at the thermostat, it says 50%, humidity, 40. I mean you can get some. When we've had them, they walked in, they looked at their hydrometer or whatever it's called, and they go yeah, your guys are at almost 50 percent humidity. There's no problem here. I'll test everything right, but they're going. There's no issue here.
Michael Carro:So and remember every area is different. If you're in arizona, where I used to live um, the humidity is extremely low, so if you hear 50 percent humidity in arizona, that's probably probably a problem yeah, ours is like 98 right outside right, it's not even raining, but yeah, that's the biggest thing that we look for.
Donnie Redhead:I think another thing that has been extremely beneficial this is if you get into some bigger properties, if you can talk to the people there that maybe previous maintenance people or anything like that for a walkthrough. Those people are kind of invaluable and a lot of times you just ask them some, some pretty open-ended questions and just let them talk.
Michael Carro:And that greatest resource is our past owners, past employees, past repairmen.
Donnie Redhead:Yeah, yeah, cause they'll, just they'll tell you everything they know, and they're happy to.
Michael Carro:All right. What about things like flooring, lighting, ceiling tiles, stuff like that?
Donnie Redhead:uh, if you get in there, fortunately, in a lot of the commercial buildings they have drop ceilings, so that's where there's a ceiling grid structure. It's got a lot of uh tiles that you know they're. They're essentially a, a cardboard-esque material, white, and the beautiful thing is you can see roof leaks, I mean they stain.
Michael Carro:So you can just you look up, you know, and so that's a great indicator, right, but if you have a drywall ceiling that's painted, it'll still show a stain, depending on the paint.
Donnie Redhead:right, it'll show stains a lot of times, but what it'll also show is sometimes between the seams will start to pull or bubble, they'll start having some things there, or the paint itself, Depending on the paint. I've seen where it traps water.
Michael Carro:Maybe like a bubble, not lead-based. That's right, absolutely.
Donnie Redhead:Right.
Michael Carro:Oil-based.
Donnie Redhead:Yeah, I mean it'll, so there can be a bubble there. But yeah, you're just, I mean you're purely looking for anything that just doesn't seem right. I mean, if your gut walking through there and you say, gosh, that just doesn't, something doesn't look right, there's, there's probably an issue there that just needs to be investigated.
Michael Carro:Right, let's talk about flooring. You know you're walking the property. You know you see maybe cracks in tiles, you might see different elevations in the flooring. You could be off grade on grade. Talk about the various types of situations that you see with floors.
Donnie Redhead:Yeah, we have a couple of different. You know, a lot of times commercials on grade, you know it's on on a slab. If I'm walking in, immediately what I'm looking for is sometimes changes in elevations between spaces, between rooms it tells me that there's they may have done something in there to cover something up where, if you you walk in and then there's this this doesn't seem quite right of a lip it may have covered something up. You know up where they layered a flooring over another flooring. So there may be an issue there. Another thing, too that we're dealing with on one property we're looking at is some of the tiles cracked and what you do is just go around and knock on the tile right around it to see is it breaking free, breaking free from the substrate, or is it? Did someone just drop something pretty heavy?
Michael Carro:so, greg, who works in our office, uh, greg hazard, he, um, he, I forget what he calls it, but he goes around with the broomstick, um, and he just bangs on tiles, and here this is usually a new construction, and whenever he heal here the I think he calls it the money stick Once he hears a hollow, meaning they didn't really put enough. Is it mortar?
Donnie Redhead:Yeah Well, yeah it's whatever it's called.
Michael Carro:And so then he just marks an X, meaning that the tile guy has to come and take it out and redo it. So he goes around with his money stick and just starts banging on tiles and if anything has the hollow sound, he marks it and they have to pull it up. So, and that is that what you're talking about?
Donnie Redhead:Yeah, that's exactly right. Yeah, so, but in this scenario, obviously we're doing the walkthrough, looking at the property to see if it's in good condition, and that's obviously talking about construction, delivering it properly. This is more you know. Is there an issue that the work maybe had lasted, but not lasted long enough because it wasn't done properly?
Michael Carro:And then what about lighting? Any any unique things about lighting?
Donnie Redhead:Yeah, yeah, I mean, well, I'm gonna, I'll talk a little bit. I was gonna say there's the only thing I really like to look at. I mean, if all the lights come on perfectly, what a lot of the leds have maybe about an inch. We're talking like the two by four fixtures. That's what happens with a lot of ours. The new ones are now lay-ins so they're just a flat panel. But with the older versions that maybe been around a little while, you can tell if they've been retrofitted, if they have a bulb in there with about an inch on either side. But are these problematic? No, if they have that, that's a good sign. If they don't, then those fixtures are going to require more maintenance.
Michael Carro:You mean the fluorescent.
Donnie Redhead:Yeah, they're fluorescent fixtures.
Michael Carro:That means the ballast is going to go bad, by the way, if you want to convert your fluorescent lights to LED, it literally takes. You can watch a YouTube video. You can convert those, every light fixture, in about three minutes for no cost, plus the cost of the light bulbs, the new light bulbs, the LED bulbs. Yeah, direct wire, direct wire. I mean, it is so simple. We'll just go convert.
Michael Carro:And then, number one, you'll save electricity the moment you do it. And then, in addition, you're lowering the amount of heat, depending on the type of light bulb that you have, because LED kicks off very little heat and so, from you know, depending on the space, some lights kick off a lot of heat. So if you can convert those to led, you're also saving on air conditioning. And I was thinking more specifically of the big warehouse light bulbs. Um, you know, if you have a big warehouse where you flip a switch and it goes and then it takes about, you know, maybe two or three minutes to actually fully illuminate, those are big metal, halide or different types of gas bulbs that just take time, and so you get those converted. You have a significant power drop in converting those to LED and they have fantastic little flat, maybe eight inch, donnie, 10, whatever um led bulbs or flat panel um bulbs that go into warehouses.
Michael Carro:That are phenomenal great coverage, instant light on and off. Especially with these um these bulbs that if you were in a warehouse and then you turned it off, they have to cool down before they start back up. So if somebody accidentally hits the switch, you know it might take a couple of minutes to get back up. So what does it typically cost? And and and listen, your tenants want led lights as well. So, as far as the warehouse bulbs, other than needing a lift in many cases, what's the cost of converting those to LED typically?
Donnie Redhead:That one's very open-ended. Only because it depends on the size, right, like you're saying. How tall is it? Do they need a lift? How difficult is it to get in there? I think those fixtures last time we did it I think they were about $300, 300 for the nicer, larger fixtures but at the same time, when we went through and did it, you can use less than the than the other side. They just have great coverage. Um, and then usually what I've I've seen, I think, around here for our electricians cost maybe about a buck 20, buck 50 for per fixture. If you want to have an electrician, do the right.
Michael Carro:150 yeah correct 100, not a dollar 50 donnie's. I wish he was that affordable.
Donnie Redhead:Oh, but he's 50, but he's not dollar 75 right um so yeah, that and and I guess kind of on the outside talking about the moisture to drainage for the building, um, seeing if it has gutters. Are the gutters backed up, causing issues for it to go in? One thing that we've done a lot of times is going back and looking at the property multiple times. Isn't bad, because you'll go there, you'll look at it, you'll go there kind of envision it different. You'll go there, go there sometimes when it rains. That's not a you know, you see it raining.
Donnie Redhead:Take advantage and go, take a look at the building when it's raining and you can see how the building reacts during a storm event. Is it? Is it running back into the building? Are the gutters overflowing to where? Maybe you didn't want to get up on a ladder and look down into the gutter? Maybe you can see where the roof is actually leaking. There was another building that we have under contract that the roof was how it was designed is coming off and it's running back into the building where, if we just have a gutter added, it's going to remove that as an issue. So seeing how it reacts in that environment is is also a good.
Michael Carro:Good little tip, right, right, um so any benefit when you see an electrical panel? Uh, sometimes they're labeled, sometimes they're not. Makes a little bit more complex. Um, but I know over the years we've run into certain electrical panels. We buy a lot of older buildings and most of them are fine, but there are some that we can't seem to get insurance on. That you should probably pay attention to. Is there a certain brand or is it just a certain era? Explain that issue, because that can cost you some money. On a perfectly good working panel electric panel and the insurance says no, we won't insure the building because of that panel, then you have to go in and replace it. Talk about that.
Donnie Redhead:Yeah, we only ran into it one time, okay, but it seemed like it was a well-known issue.
Michael Carro:And that's where Like a Chinese drywall type thing.
Donnie Redhead:I don't even know, it's so foreign to me. That's a scenario, a Chinese drywall type thing. I don't even know, it's so foreign to me. That's a scenario where I think you mentioned Chad GPT. I'd probably just take a photo of it. The problem is a lot of the older panels. They have all the stickers removed, they have all the indicators removed, so it's kind of hard to tell. But if, at least if it does and you and you maybe upload that to something like that, I can tell you. Of course, yeah, everything is varying degrees of how much you want to spend and how much risk you feel comfortable with getting your electrician. If you are concerned, have them take a look and that'll at least mitigate that. Um, but yeah, that on all the times that we've ever dealt with it, I think it only happened once so let's discuss things.
Michael Carro:when you're walking a property that you know are nice to find, you know you walk a property like, oh, I didn't realize it had that, or I didn't realize this layout was like that. I mean, what are the finds that say, wow, this is an added value or could be an added value opportunity? Do you have any that come to your mind?
Donnie Redhead:Yeah, the first one is fire suppression. Oh yeah, yeah, if I see the riser outside it looks, everything looks great. That that's usually kind of a nice, nice to see, right. A lot of people appreciate that or wanted or needed for code whatever, whatever it is, but that is a is definitely one. When you see that, you appreciate it.
Michael Carro:One thing that pops into my mind is excess land Because the ability to potentially you may not do it, but to potentially build another building on that property. Now you have free land, essentially that you can add another building, and I'm thinking of my. Actually, my very first acquisition was an ugly 6,000 square foot warehouse with extra land. I didn't know it was extra land at the time. It was my very first property, commercial property. I bought. I didn't have a clue what I was doing and it turned out to be an absolute unbelievable property because I was able to build two additional warehouses a 3,300 square foot and another 6,000 square foot in addition to the 6,000 square foot that I bought and that really it was free land and the bank just absolutely rolled out the red carpet to give me a loan to build those, with no additional out of pocket money. So to me that was a nice find.
Donnie Redhead:Another one that is definitely more important with retail is it has, you know, really nice size existing signage Signage. Oh, big deal, yeah, being grandfathered in, cause a lot of the new, some new regulations are. They're just, they're always trying to make it a little tighter, a little smaller. So if you got a brand that really demands, you know really nice big, premium signage, and if the building already had it a lot of times, that's grandfathered in.
Michael Carro:I'll add ceiling height. The higher you have on the interior ceiling height, the more desirable that is for almost any type of commercial space, whether it's retail, warehouse, office, anything. Think about it. The lower the ceiling, the less desirable it is, but the higher the ceiling, that's more in vogue and that's really what more people want. Think about a retailer. They can now display higher. They can have display racks or displays above the actual racks themselves.
Donnie Redhead:So ceiling height, uh, is very, very important uh, another one too that that was kind of surprising was uh, landscaping it has, it could be a little bit overgrown, but if it has a nice mature landscaping with irrigation you know irrigation, timer, everything working it it's kind of one of the last things we think about, but at the same time it's a real cost.
Michael Carro:I mean, if you I was talking to a friend of mine this morning, mike, and now he's redoing a historic house, the first landscape quote he got, and to Don's point, was $100,000. Oh my God, $100,000.
Donnie Redhead:I mean what is going on over this house? Uh, don't, it's not even that big a spot.
Michael Carro:Don't say that on the air. His, his wife will not be, happy with me. I just made a gentle suggestion. Listen, it was probably worth every bit of that hundred thousand dollars. However, there may be an opportunity to to. I was really more to making your point that mature landscaping is really, really beneficial. Landscaping cost is real, yeah, okay, by the way, his house is pretty big I just a hundred thousand dollars.
Donnie Redhead:I know it's probably a good value, wink, wink, but Well, and I got into Well, to that point I was thinking irrigation.
Michael Carro:Well, and that goes hand in hand, I know Correct. But when you have the irrigation system, I mean that's a big deal.
Donnie Redhead:Yeah, and it was it's kind of funny Obviously residential, because I'm about to talk about my personal house. When we moved in, the irrigation wasn't working really well. There was issues, the heads all were going kind of haywire. And I had an issue I told you about where the backflow busted and I need to put on a new backflow. So I switched it out. Everything came on perfect. One head I need to go over and replace. So I'm sitting there.
Michael Carro:So it was probably the ball inside the back Must've been some grit or something caught up in there. Sorry, Don tell us, what a backflow is.
Donnie Redhead:So in a lot of the municipalities, especially here where we're at, you have to have a plumbing system that basically it's your fresh water coming in to the building. It comes up out of the ground, looks like an upside down U and there's a system on there that's essentially valves that allow one way, valves that allow the fresh water to come into the building and allow you to use, and if there's an issue, what happens is with the property or even with the main system. It won't allow that water to come back into the fresh water system and contaminate what's going on, that's going to the general public.
Michael Carro:So think about this. So all commercial buildings and irrigation, it's called a backflow preventer. So think about it. Just the name says it all it prevents the backflow of contaminated water. It's a backflow preventer and so. But what Don's describing is in that valve? That can get problematic. Maybe it was, yeah.
Donnie Redhead:If you. One thing that I think caused it is when we bought the house, turning on and off the water a lot of times that flushes that kind of grit. That's where maybe you have to blow back out a faucet or anything like that as you're working through it. I think that caused it to get, and probably was before, but caused debris to get built up in there and it just needed to be flushed out. Cause debris to get build up in there and it just needed to be flushed out. But it's required on all commercial buildings here. But it also is required for irrigation. I learned because of the chemicals that are typically used in your lawn and everything. They don't want that, if there was an issue, to get washed back into the main system. So, yeah, irrigation landscaping if it's mature, those bushes take a long time to establish and they're very costly to replace at that size.
Michael Carro:So a thousand dollars, yeah. So, since you're on landscaping, talk about when you visibly see, maybe, cracks in the, the dirt, like erosion issues. You know what could be problems like that and what can cause the erosion. And I'm talking about, you see, like a little mini canyon. It may only be six inches wide, you know, six inches deep, but but. But it's causing a problem. It's caused from something, don't ignore it. It could be that your gutter systems are are not working properly or not, um, draining properly, or don't have a place to go. I know that there have been situations where water is coming up from underneath the ground. Yeah, you know. So talk a little bit about those.
Donnie Redhead:Yeah, I think the one that really stuck out to me that was probably the biggest example is where the building, during heavy rain events, would have water washing into the back of the building and like inside the building, inside of the building, and they they tried building a wall back there to kind of prevent this, this water, from coming back in. And typically if you see these kinds of things, when someone builds a building it's engineered. There's a lot of thought. You assume that there's not as much thought that goes into this, but there's a tremendous amount of science and math that goes into engineering a building and it's usually because there's some drainage issue that's not taking place.
Donnie Redhead:This system had retention ponds that were all backed up and they just weren't designed properly. So we had to go back through and and they were like oh, we just need to build bigger walls. No, that's, there's something not working here as it's designed. So go back through. We camera'd all the um, the sewer or the, the stormwater system in the parking lot, found the, the issues, cleaned up the stormwater and now there's zero issues. So a clog?
Michael Carro:Yeah, really, just a clog at the end of the day. All right. So since we're outside, let's talk about parking lot and drainage, maybe ponding broken asphalt, ada compliance issues, compliance issues you know, those are things you need to check. Commercial buildings have to have, you know, have to have a ADA space and ADA access. Now there are grandfathered situations where today's code is if the building is in compliant with when it was built or when it was updated and let's say it was built or updated 20 years ago it was in compliance with the rules of that day. Every time they change the rules does not mean you have to change your building, okay. However, if you plan to change um so much of the building, that can trigger that everything be brought up to date. I think here it's 30%, 30%.
Donnie Redhead:I think in the city maybe it's 30%, it's something like that. Yeah, If you are planning a renovation that's 30% of the assessed value of the building, then you have to bring it up to whatever the current code is.
Michael Carro:Yeah. So just be mindful of that. I mean, if you're not making any changes, fine. But you know, a lot of times when Donnie and I have a property, we may not be required to put in an ADA restroom, but you know we're just like, well, no, listen, we're not required, but let's just do it.
Michael Carro:You know, again, we're about how do we make our, how do we make our tenants as happy as they can be, and if we have the space, some buildings just don't have the physical space to do the changes. And you know, I mean, think about New Orleans, how many buildings over in that area. They're just really confined and maybe it's impossible to make a building ADA compliant. So, and Pensacola, where we live, has a lot of those same buildings. But when we have the opportunity that we want to update or upgrade a restroom, we still might say, you know, let's go ahead and blow out this wall, make it bigger, you know, put in a 3-0, which is a 36-inch door. You know, there's things that we can do even though it's not required. Sometimes it's just good to do it anyways.
Donnie Redhead:And I think that goes to the costly or more of the value finds that probably should have been added into that category was if you get in there and find that it has been brought up to ADA compliance, where maybe it has ramps nice, concrete, beautiful, you know railings and ramps to get into the building, the doors have been modified. Uh, maybe it has an elevator ADA restrooms. All this I mean to to bring a building up to code, I mean money money money, money, money.
Donnie Redhead:Yeah, a lot, a lot of money. So, uh, and a lot of times it makes it that much easier to release. If it is, that's right, so it. That is. That is a huge added benefit. Uh, if the if maybe the building was old but it had been brought up to us current code. You know, even in the past 10 years, a lot of times it'll have that great infrastructure that is is making it a lot easier to refill so still outside now you're on the roof.
Michael Carro:Some things that you might commonly see is they kind of patched it a million different ways over time. It's great to go on top of buildings. You've got to be careful During a rainstorm or at least right after it. You can then see how the water is flowing off the roof or if it's not flowing off if they don't have a good slope. If you see big pooling, that can be a problem. The age of the roof, the membrane age, things like that. Talk about some of the experiences that you have and what you focus on.
Donnie Redhead:One thing that is, I'll say, a nice added benefit again for a roof is, if it maybe it's the two-story building that's the ones that always pop to my head If it has an interior roof access, that makes it a lot nicer. I mean, if you have to get up and climb a ladder every two stories you got to get up there, that makes it a bit more challenging. So, having a roof access, if you get up on the roof, especially with the commercial buildings and their flat roofs, the two typical roof systems you see you have your TPO or PVC, the white membrane style roof, and say you did get up there and it hadn't rained in a couple of days, usually it'll have these indicators of just what you would think would be there Discoloration where there'd be ponding, so maybe there is the discoloration?
Michael Carro:is it ponded and then, as the water evaporated, the dust or dirt that was in the water stayed in.
Donnie Redhead:that, yeah, it kind of just always builds like this mildewy type build up there. Another thing is where the PVC TPO is breaking free so it can get air bubbles or moisture bubbles underneath. You'll see that, wouldn't you just take a knife and pop it? Yeah, absolutely. Just bring a handful of screws up there and just throw them down.
Michael Carro:Oh, you know, that's a great point In our leases. We now, by the way, nobody follows this, but just to be clear, but we have in our leases that the tenants are not to go on the roofs, and why would we have that? It's not to say that we don't want them to be proactive, but a lot of times people don't think about wearing the right shoes, and I and I'll draw, I like to draw drastic examples. Let's say you went up there with stilettos not that you would ever do that, but but that clearly is not the type of shoe you would want on your roof. Right, but think about all the different types of of shoes you just don't want up there cowboy boots, hard-soled.
Michael Carro:But you also have workers that will do stuff up there and they leave screws and other things. Well, a screw looks benign until you step on it and now you've created a little puncture in the roof. Or you have an HVAC company that goes up there. They changed out things, I'm telling you, they leave parts literally just sitting on the roof and again those parts then actually, over time, hurt the roof, or if a wind comes, it's knocking parts around, and so roof, roof maintenance and cleanliness is definitely an advantage.
Michael Carro:So make sure you, your, your drain lines all have proper blocking. You know the air conditioning system will have a drain line and a lot of times it may run off towards one side of the roof and they'll typically put it on blocks, and there's certain blocks that react better to the roof and take care of the roof better than others. A lot of times they'll go cheap and want to use a wood block. That's not what you want either. And then making sure the cleanliness of the roof that is honestly a big deal. Get rid of all those little screws and all these little extra. Get rid of everything, because during wind storms this stuff goes places and the very least, those screws are going to go onto your parking lot and puncture your tenant's tires as well. So it's a variety. Cleanliness on the roof and, of course, around the property are paramount.
Donnie Redhead:Yeah, it's always amazing to me how many screws are on the roof. I don't even understand. I really don't. I don't understand why they're up there with so many screws in the first place. Why are they on the roof with this many screws in?
Michael Carro:the first place? Why are they on the roof with this many screws? I don't understand where it's going. I actually don has answered the question enlightening the the answer you just gave was these roofing companies go by buildings and they just throw up on the roof handfuls of screws I don't.
Donnie Redhead:I don't even doubt that. Do you know? I don't doubt that I was out at one of the buildings that we have three stories. Three stories up I found a rock as big as my iPad. So someone either had to throw it all the way up there three stories, or they would have had to have got this rock carried it up on the roof to throw it down. I mean it's unbelievable. But the amount of screws, cigarettes that are just being tossed around, I mean it's almost like it makes it defies logic. There's no reason for this. There's madness.
Michael Carro:It's madness.
Donnie Redhead:Okay, yes, I had to, I had to.
Michael Carro:It's madness. Madness, I tell you, that's my saying. It's madness, I tell you, that's my saying. So one of the things that Don and his crew does that I'm actually very impressed with is they give a great historical, they create a history of the property with photos so I can go in every time they visit a property. They take photos of things that are problematic, things that are fixed, that are just the general health of the property, and then they record it and it's really really helpful.
Donnie Redhead:You want to talk a little bit about that? Yeah, so I mean it's. It's something that we've, I think, had to learn really the hard way. But just taking photos before, after, extra photos for for so many reasons, even just photos of the exterior of the property, just always kind of seeing what the condition is, because there's so many times that we get in there and you can be trying to solve something as simple as this is and forget how to put it back together. But it's just great for documentation going back through history. They're invaluable. They really are, because they just the reports that we do. We've really come a long way using our software. We're getting ready to do another software change, which will be an even further improvement, but yet documenting the property and its history is especially now with your phones. You can take a million photos and it doesn't even matter, right? So, um, yeah, that's, that is a is a nice, nice benefit as well Fantastic.
Michael Carro:Well, I think that was a good episode. That wraps up another episode of the blue dirt podcast where even idiots can make a killing in commercial real estate. Listen, we'd love to have you subscribe, share and like our share and like our video and appreciate you listening in today. Thank you, see, everybody loves us. That's a wrap for this episode of Blue Dirt. We're here to help you build smarter, invest wiser and create longterm value in commercial real estate, one solid foundation at a time. If you found today's insights useful, be sure to subscribe so you never miss an episode. And if you know somebody who could benefit from these discussions, share Blue Dirt with them. Got questions or topics you'd like us to cover? Reach out. We'd love to hear from you. Until next time, keep digging deep, stay sharp and remember real value is built from the ground up. See you on the next episode.
