Hi All,
I am working on an acquisition of an old property built in 1924 and consists of 42 units. My market is requiring all buildings to apply for a renewable rental license every few years starting this fall. The property we are in contract on has existing fire code violations that would render it unable to pass the fire life safety review and therefore would be unable to receive a rental license. This is effectively the same as losing a CO in my market. The major items that is preventing it from passing is the lack of a fire suppression system which appears to trigger a higher standard for fire monitoring and alarm.
I have limited familiarity with these types of issues and am trying to make sense of a seller credit of $50K to make the problem go away. Anyone have any experience with these types of fire life safety issues and cost to repair?
You need a professional to price this, but I would imagine it is more expensive than $50k to solve.
Could be wrong though - too many factors & variables to definitively say.
I'd echo the above: $50K seems very light for fire suppression / life safety capex.
Proposed solution: make closing contingent on seller curing the fire code violation.
This isn't something you can guess on from behind a desk. You should get multiple fire suppression contractors to provide actual proposals to upgrade the system to meet the code. They'll know what the municipality is requiring and what kind of work would be involved. Not only will that provide more accuracy in your underwriting but you also may need to present it to the seller during negotiations.
agree with the above answers that you need consultant opinions/contractor bids to get a real number. Years ago i was in charge of retrofitting high end condos for FLS and the cost came in near $2MM for all wiring, programming, and devices.
Actually the best response above is to have the code upgrades be a condition of the sale, on the seller. Reduces your exposure, and the hassle of running a time consuming CapEx project. Something like this could take 6 months to a year with design/permitting/actual work.
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