Annual Unit Inspections

If I could give property managers one piece of advice that will have the greatest benefit in the management of their HUD property it is this:

Perform Annual Unit Inspections

Actually I would tell them:

Perform Bi-Annual Unit Inspections

The truth is that HUD requires you to perform annual unit inspections:

Owners perform unit inspections on at least an annual basis to determine whether the appliances and equipment in the unit are functioning properly and to assess whether a component needs to be repaired or replaced. This is also an opportunity to determine any damages to the unit caused by the tenant's abuse or negligence and, if so, make the necessary repairs and bill the tenant for the cost of the repairs.*.

So although HUD requires this (and it will be a finding on your MOR**) it actually is a very common sense practice.

This is not to be confused with the move-in/move-out inspections which also need to be performed*** For the move-in/move-out inspection, HUD actually has a sample form that you can use (you don't have to - you could make your own if you prefer, although everyone I know uses the HUD one because why risk messing with HUD and getting a finding on you next MOR). For the annual inspection there is no such sample form but I did find a nice simple one online that you can try.

The biggest benefit in doing these inspection is of course the REAC. REACs are giant pain in the neck and require a great deal of work to get ready for them. You of course are all aware of the new rule which give managers only a two week notice before the REAC (if you don't you in for a big surprise). But even with the previous two month notice - getting every unit ready for the REAC is a very difficult job. The annual inspections are a great opportunity to go over the unit and fix anything which may be a finding later on.

It also a wonderful opportunity to point these findings out to the tenant.

For example, you might say to your tenant, "Hey tenant, I know that you needed a battery for your remote control car but you can not take one from the smoke detector because then it can't detect smoke!"

Or maybe, "hey tenant, that dresser really looks good against that window but since you live on the third floor, you might want access to that window in case of a fire so please fix that blocked egress".

Or, less cynically, you might remind tenants not to tape their pull cords or remove closet doors. You might want to remind them to call the office if their refrigerator has a broken gasket or if their sink has a leak.

This is why I recommend performing these inspection twice a year (I know properties that perform them quarterly). Once you get used to doing them, they do not take a long time (3 minutes per unit tops) and the more often you do them, the better prepared you will be. Depending on your property setup - you can divide the inspections over a few days (i.e. 2 floors a day for a week). Have a set schedule for the year that way you won't forget to do them.

HUD is in the process of a complete overhaul of their REAC inspection- NSPIRE, and while there is a lot that we don't know about these new rules, one thing seems clear is that there will be a bigger focus on inside the actual units and less focus on the common areas. Having the units inspected a few times a year will really make your REAC prep easier.

There is additional benefit of simply seeing your tenants in their unit and getting an understand of how they live. You will find violations (like hoarding and squatters) but you will also find out things about your tenants that will allow you to get to know them better and understand the. You will see the pictures of their family, their pets, their painting, you will see how they live, and this will improve your relationship with them and will lead a smoother management of the property.

So take my advice, do (at least) bi-annual inspections. You'll thank me.

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*HUD 4350.3 REV-1 6-29 A.3

**HUD-9834 Category C d-g (page 2)

***HUD 4350.3 REV-1 6-29