The 2020 announcement that the U.S. Department of Housing and Urban Development (HUD) was modernizing its inspections process came as a relief to the multifamily community. HUD conducted an overdue overhaul of its Real Estate Assessment Center (REAC) and now provides customers with an avenue for a self-inspection process.
While the update is reason to celebrate, it is important to remember that with that newfound autonomy comes a heightened level of accountability.
The new National Standards for the Physical Inspection of Real Estate (NSPIRE) prioritizes health and safety and favors residents over properties. Operators must meet specific HUD standards and requirements and establish methods to accurately document and verify those qualifications.
“The restructured inspection system from HUD establishes the framework for properties to conduct self-inspections on their own schedule and to proactively diagnose and resolve issues. It is absolutely a welcome change,” said Kim Moehlmann, Senior Vice President at SightPlan. “But it shouldn’t be confused as HUD loosening the reins on its oversight. In many ways, the demands on properties are actually increased because on-site teams are now accountable for identifying and reporting issues, documenting resolutions and accurately submitting their own inspections. Any inconsistencies, documentation problems or reporting errors automatically result in further scrutiny.”
Under NSPIRE, inspections assume three forms: first, Property Owner/Agent (POA) self-inspections conducted annually by owners and operators; second, REAC Contracted Inspections performed by a third-party to ensure quality; third, HUD Quality Assurance Inspections conducted by HUD federal inspectors. Failure to meet HUD expectations automatically triggers the next level of inspection. The three-tiered system is designed to strengthen current standards and protocols used to assess properties, as well as convey HUD’s property management expectations.
It also encourages the use of property technology solutions to conduct and submit inspections.
Here are 4 benefits to conducting self-inspections through a digital platform:
To ensure consistency in inspections, an electronic, customizable inspection platform is almost a requirement. While paper inspection forms are largely subject to the interpretation of the associate filling it out, resulting in a range of results, digital inspection technology limits the potential for variance.
Associates completing the electronic inspection are guided through questions with a limited number of selectable responses, rather than an open-ended, fill-in-the-blank format. The result is uniform inspection reports, regardless of who fills them out.
By eliminating paper inspection reports, operators also realize ancillary benefits, including streamlined budgeting and procurement practices, eased integration of inspection reports and any damage fees to be collected with property management software and the ability to electronically submit inspections.
2 Time Savings
“By storing all inspection notes, time-stamped photos and documentation in one robust and customized platform, teams can significantly reduce the amount of time they need to dedicate to annual HUD inspections,” Moehlmann said. “Easily accessible comparison reports from the previous year give teams a head start on the current year’s inspection, and can also help maintenance to schedule preventive work. That saves an incredible amount of time over the course of the hold.
Additionally, in some states, a demonstrated proficiency in inspections could even qualify a community for a three-year inspection renewal period."
3 Ensure Compliance
A customizable inspection template calibrated to account for current HUD criteria allows teams to structure inspections to confirm compliance. The ability to tailor inspection templates enables communities to remain up to date with HUD inspection requirements, or even get ahead of the process by conducting pre-REAC inspections to preemptively identify problems. Additionally, platforms that include unlimited, customizable templates offer even greater flexibility and efficiency to meet the new requirements.
Through NSPIRE, HUD is taking a “People-Properties-Programs” approach with a focus on providing safe, maintained and habitable homes and gathering resident feedback. Property deficiencies are categorized as Urgent, Planned and Programmed, with a required response timeline for each.
Modern inspection platforms enable properties to schedule the work accordingly and track progress to ensure task completion within the designated time frame.
An electronic inspections platform provides increased transparency throughout the company and better visibility at the corporate level, improving oversight and risk management. When portfolio managers and executives can pull reports, view notes and photos, and track the progress of maintenance teams, it creates a new level of internal accountability throughout the entire inspection process.
With HUD now permitting properties to conduct and submit their own inspections, accountability is key which comes a greater importance on data integrity – namely, the source of that data.
The NSPIRE model rewards proactive, responsible property managers but still has the teeth, through its tiers of escalation, to guarantee that HUD expectations are met. Operators are ultimately accountable for the integrity of their inspections and will become subject to the second and third tiers of the process if their self-inspections don’t meet quality expectations.
Through the use of a modern, comprehensive platform for inspections, multifamily operators are empowered to stay ahead of the curve, optimize the process and receive the HUD inspection scores they deserve.
Want even more recommendations on how to meet HUD’s NSPIRE requirements, download our HUD Guide.