$1.6M in Repairs Found: Why a PCA Was Critical for This Mixed-Use San Diego CRE Deal
🏢 Overview: The Risk and Reward of Mixed-Use Investments
Multi-family and retail properties in San Diego can deliver excellent returns—but older, mixed-use buildings come with hidden risks. Aging systems, seismic compliance, and deferred maintenance can quickly turn an opportunity into a costly burden.
In this case study, our commercial inspection and cost to cure report helped an investor confidently close on a $5.8 million property built in 1925, revealing $1.6 million in critical repairs before escrow closed. The result: a successful transaction, protected ROI, and full lender approval.
⚠️ The Challenge: Evaluating a Century-Old Mixed-Use Building
An investor targeted a 19,670 sq. ft. mixed-use property—retail below and residential above—built in 1925. Though the location and renovation potential were attractive, both the investor and lender needed a clear picture of its condition.
To secure a $6.4 million loan, the lender required a Property Condition Assessment (PCA) and cost to cure report identifying all necessary repairs and safety risks.
🛠️ Our Solution: Full Commercial Inspection with Cost-to-Cure Analysis
Our CCPIA-certified team conducted a thorough commercial inspection based on ComSOP (International Standards of Practice for Inspecting Commercial Properties). We provided a full report within 3 business days, backed by real-time repair cost data.
Key Issues Identified:
- Roofing and Drainage: Gutters were over 35 years old and corroded, posing water damage risks. Replacement was recommended.
- Moisture and Mold: Water intrusion and mold were present in several areas, requiring immediate remediation.
- Fire Safety: No fire extinguishers or sprinklers were visible. Extinguishers should be placed every 75 feet in accordance with NFPA code.
- Seismic Retrofitting: As a pre-1933 building, it lacked modern earthquake protection—especially concerning in San Diego’s seismic zone.
- Gas Wall Heaters: Outdated gas heaters presented safety concerns and lacked modern shut-off features.
- Electrical System: Wiring was outdated, with panels showing potential for overload. A full system update was needed.
- Gas Metering: Meters were unlabeled, creating a safety issue during emergencies.
💵 Cost to Cure Summary
The inspection uncovered $1.6 million in total estimated repairs across several key categories:
- Seismic retrofitting: approximately $800,000
- Mold remediation and water damage repairs: $250,000
- Full electrical system upgrade: $200,000
- Roofing and gutter replacement: $150,000
- Gas wall heater replacement: $120,000
- Fire extinguisher and safety equipment installation: $50,000
- Miscellaneous/code-related items including gas meter labeling: $30,000
🤝 Strategic Planning = Successful Close
The inspection findings became the foundation for:
- Loan Approval: The lender moved forward with the full $6.4 million funding after reviewing the detailed report and repair plan.
- Budgeting and Risk Management: The investor was able to budget repairs upfront, avoiding costly post-close issues.
- Stronger Negotiation: The buyer’s agent used the findings to negotiate a price adjustment, protecting the investor’s ROI.
- Safety and Compliance: The investor proactively addressed seismic, mold, gas, and electrical issues—minimizing legal and liability exposure.
🔧 Why Investors Choose Our Commercial Inspection Services
Since 2004, The Real Estate Inspection Company has helped Southern California investors protect their assets with thorough inspections and clear reporting. We specialize in mixed-use and multi-family properties across San Diego, Orange, and Riverside Counties.
Here’s what sets us apart:
- Deep experience with aging and complex properties
- Clear, actionable PCA and cost to cure reports
- Reports delivered in 3 business days or less
- Trusted by lenders, brokers, and commercial buyers
📞 Schedule Your Commercial Inspection Today
Looking at a mixed-use or multi-family investment? Don’t go into escrow blind. Protect your deal with an expert inspection and real-world cost insights.
📞 Call us at 800-232-5180
🌐 Or visit www.sdinspect.com to schedule your inspection.
🧠 Final Takeaways
- Commercial investments need more than a visual walkthrough—they require strategic inspections.
- This PCA uncovered $1.6M in repairs that protected a $5.8M purchase.
- Our reporting helped secure funding, reduce legal risk, and preserve long-term value.
- When the stakes are high, the right inspection partner makes all the difference.
