$8.5 million.
That’s the number I was given recently when I asked one of our key exterior restoration contracting partners to give me the average cost of their projects. That number is substantial, and it doesn’t include costs like permitting, engineering, special inspections, or even litigation in some cases.
$8.5 million lands in the middle of a spreadsheet like your 5-year-old’s birthday cake landing on the dining room floor in front of a room full of horrified kids. It is, to say the least, an unwelcome, even tragic development. It can turn the celebration of a great deal well executed into mass confusion and financial agony.
In multifamily real estate transactions, due diligence is ultimately about risk identification, pricing certainty, and protecting long-term asset value. While property condition assessments (PCAs) are a standard component of this process, they often fall short when it comes to one of the most consequential building systems: the building enclosure.
The building enclosure—walls, roofs, windows, doors, and below-grade waterproofing—serves as the primary defense against water, air, and thermal movement. Failures in these systems are among the most expensive, disruptive, and value-eroding issues owners face.
Early involvement of a qualified building enclosure consultant during due diligence can materially improve underwriting outcomes and reduce post-closing surprises, helping you and your team save the day.
See What Others Miss
Many enclosure failures are concealed behind cladding, trims, sealants, coatings, roofing systems, or even recently applied cosmetic repairs. It can be nearly impossible to spot and correctly interpret warning signs of major issues without substantial knowledge of those systems and their integrations with one another.
For example, isolated stucco cracking may be a warning sign of improper window flashing that has led to widespread moisture intrusion. Concrete spalling could be evidence of structural steel corrosion. These issues are frustratingly difficult to analyze, and their hidden nature calls for the involvement of experts as early as possible in your Inspection Period.
Improve Capital Planning and Underwriting Accuracy
Early enclosure review distinguishes maintenance issues from systemic failures. For example, in a garden-style portfolio acquisition, early review by an enclosure consultant like BECI can help avoid full recladding by identifying phased repairs, improving CapEx accuracy and IRR projections.
Strengthen Deal Negotiation Leverage
Documented enclosure risks support price adjustments and escrows. An accurate repair escrow tied to the true remediation scope can make all the difference in the world, but without expert assessment, how do we equip ourselves for this kind of difficult negotiation?
Avoid Post-Closing Operational Disruption
Unidentified enclosure issues frequently lead to tenant displacement and emergency repairs. Possibly one of the greatest challenges involved in restoration projects in this context is navigating your relationship with your tenants. Can work be performed during unit turns? Can we phase the work so disruption is minimized? How do we select a qualified contractor who is adept at supporting tenant relationships?
Align Lender and Investor Expectations
Understandably, lenders ask a lot of questions. Early reports from an enclosure consultant don’t just minimize your risk; they also bring certainty and reduced risk to your lender, ultimately resulting in fewer lender delays.
Accelerate Post-Close Execution
Assuming the asset you’re purchasing isn’t pristine, having a clear plan of action post-close means you can get to work immediately, remaining strategic instead of reactive. Your entire team has a single source of truth and clear, concrete objectives to achieve. No chaos, uncertainty, or general milling about. Just decisive action to capitalize on the win of the transaction.
Protect Long-Term Asset Value
Proactive enclosure management stabilizes Net Operating Income (NOI). A PCA is an excellent first step, but long-term involvement of a consultant in developing maintenance and monitoring programs ensures that your asset retains or even increases value in the years ahead.
Let’s face it: due diligence is an inherently complex process. But it doesn’t have to be full of uncertainty and excessive risk. Incorporating building enclosure into your process with intentionality will go a long way to helping you save the day.
About BECI
BECI provides expert building enclosure consulting services for new and existing construction. With a focus on sensible spending, stakeholder collaboration, and long-term building resilience, BECI helps clients minimize risk and extend the life of their assets.
If you have any questions, don’t hesitate to reach out and connect with our experts.
