Here’s a tale of woe we often hear. Investors should have called us before they purchased a building, as we are the No. 1 elevator consultant working with commercial real estate investors and REITS. Elevators can be a “black hole,” into which no one can see and few can predict the financial impact going forward.
Here’s the tale of woe –
A commercial real estate investor (sometimes referred to as a REIT or just a real estate investor ) called since he had purchased a building and the owner told him that the elevator service contractor told him that the elevators were in “great shape.” Once the building closed, he realized that the elevator needed a full elevator modernization. This was, unfortunately, a capital expenditure he was not prepared or forecasted to make. This expenditure would throw off his expected return resulting in a must lower IRR than expected for his investors.
FAILURE TO HIRE AN ELEVATOR CONSULTANT CAN COST MONEY
If he would have hired an elevator consultant or a vertical transportation consultant he would not be in this position. A few facts are in order. First, the elevator service provider is there to maintain the equipment. However, if you have kept up with the industry, you may (or may not) be up to standards. Second, there is a conflict of interest. Why? Because the elevator service provider would be grading their own report card. Of course they are going to tell you the equipment is in great shape just as the seller of the building will agree with them. Neither has an incentive to tell you the truth in the way that an independent elevator consultant does.
Fourth and in summary, protect the investment you are making and spend the minimal cost for an elevator due diligence or a vertical transportation due diligence. The Elevator Consultants (TEC) typical ROI is 210%.
Don’t let this “tale of woe” happen to you. A simple investment in securing knowledge from experts in vertical transportation can save you a lot of money in hidden problems down the road.