Preparing for a Physical Inspection

Certain rental-housing subsidy programs, such as the Low Income Housing Tax Credit (LIHTC) offer a dollar-for-dollar tax credit (known as “Section 42 credits”) for affordable rental housing investments. The annual amount of the LIHTC subsidies ranges from $10,890 for a single renter to $29,990 for a family of six. This creates a significant opportunity for investors who are interested in creating affordable housing. As a San Diego property management company, we are very aware of the physical inspection regulations that are tied to tax credit programs. For applicable clients, a property owner or manager will be called upon to prepare for and participate in the required physical inspections by state housing officials.

Our primary goal is to pass inspection, so that participation in the subsidy program is threatened. To that end, we conduct a pre-inspection walk-through a week beforehand and fix any items that would be called out by inspectors. Here is a short version of the pre-inspection checklist we use for LIHTC and Section 8 units:

One Week Before Inspection

• Check batteries in smoke and CO detectors
• Test ground-fault-interrupt outlets
• Check for tripping hazards, such as torn flooring, carpet wrinkles and TV cable
• Ensure that fire extinguishers have been inspected within the last year.
• If applicable, verify elevators have been properly inspected.
• All exits must be unblocked and window bars must open from the inside.
• Spray for vermin
• Change air filters
• Have graffiti removed
• Verify American Disabilities Act requirements are met, including designation for handicapped parking and other accommodations
• Check to make sure you have working keys for all units
• Verify you have access to all private areas

Day of Inspection

• Clean up the building entrance and surroundings
• Make sure dumpster and trash compactor are in neat condition
• Prepare the paperwork: rent roll and certificates. The rent roll contains data for each unit, including number of occupants, household income, days vacant, which units are ADA compliant and which units are Section 8.
• Take a last-minute check of the units that will be inspected, if possible. The units will be listed by the inspector and will constitute about 20 percent of all units. You may or may not receive notification in advance.
• Come equipped with a measuring tape and a camera

You will find that inspections go much more smoothly if you don’t keep the inspector waiting, treat him or her with courtesy, and don’t pepper the inspector with questions or defensive remarks. Address all noted items immediately so that you are ready for the closing review. Once you pass review, pat yourself on the back for a job well done.

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