Routine property upkeep that has been neglected and repairs or replacement is needed to the existing structure. Only use as a condition if the amount of the deferred maintenance is 5 percent or greater based on the sale price. Deferred maintenance items often include roof, structure, HVAC and other major ticket items (Capital Expenditures). It does not generally include minor upkeep or short lived items (painting, carpeting, etc.), unless it meets the cost threshold. Also, it does not include property improvement Plans (Hospitality) or repositioning a property from Class-C to Class-B or similar marketing-based improvements. While minor upkeep items (Short-lived items) are considered in multifamiliy properties as part of normal turnover, typically these are covered in other properties as tenant improvements. Also it’s common, during the holding period, to defer these costs until the property is sold.
