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January 27, 2025 16 mins

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This episode focuses on the critical importance of Phase One Environmental Site Assessments (ESAs) for real estate investors and banks. We explore how these inspections help uncover potential environmental risks associated with properties, safeguarding investments and ensuring compliance.

• Importance of Phase One Environmental Site Assessments 
• Process and timeline of completing a Phase One ESA 
• Record reviews and site visit significance 
• Identifying contamination indicators during inspections 
• Differences between Phase One and Phase Two assessments 
• Real-life examples of Phase One inspections 
• Importance of due diligence in property transactions 
• Call to Action: Contact us for commercial and residential phase one inspections

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Welcome to the Standing Out in Ohio podcast,
where we discuss topics,upcoming events, news and
predictions with real estateprofessionals and entrepreneurs.
Listen and learn what makestheir companies and themselves
stand out and gain advantagesover the competition and gain
market share.
Subscribe for the latest newsand discussion on what it takes

(00:23):
to stand out from the crowd.
Now here's your host, jim.

Speaker 2 (00:30):
Hey everybody, Welcome to the Standing Out how
Podcast Jim and Laura here.

Speaker 3 (00:35):
Hello everyone.
Okay, laura so continuation ofthe last podcast.

Speaker 2 (00:40):
This is a previous podcast, we're going to talk
about this one phase oneinspections For commercial
property inspections.
Well typically yeah, Forcommercial properties.
If you're a residential realestate agent, you might be going
yeah, phase one, thatpre-drywall.
Nope, this is a different one.
This is phase one,environmental site assessments,

(01:04):
phase one, esa.

Speaker 4 (01:05):
But first let's listen to this Habitation
investigation is the way to gofor a home inspection in Ohio.
Trusted licensed homeinspectors for your needs.
From radon to mold towarranties For a great home
inspection, you really can't gowrong.

(01:27):
Visit homeinspectionsinohiocom.

Speaker 2 (01:32):
All right, laura.
Environmental site assessmentphase one why do banks want this
done?

Speaker 3 (01:42):
Because banks do not want to have to pay for cleanup
if they find out that there's anenvironmental contamination
there that would require sometype of cleanup.
Oil, petroleum products.

Speaker 2 (01:54):
I'm a bank.
You're buying dry cleaners.
Yeah, you're buying a drycleaner.

Speaker 3 (02:02):
Phase two automatically requires.

Speaker 2 (02:04):
There's a lot of chemicals in dry cleaners that
they use, yeah.
So as a bank, I want you to geta phase one done, because if
you ever default on that loanand I take possession of that
property, you're not going to.
I'm like holy shit.
They've been dumping oil andall kinds of weird stuff in the
ground for decades.

(02:25):
I don't want to pay for thatcleanup.

Speaker 3 (02:28):
Right.

Speaker 2 (02:28):
So I would say, hey, get this phase one done.
I'll look at it and go cool,nothing crazy on here.
There's no contamination.
We're good to go.
I feel good about giving youthe loan.

Speaker 3 (02:39):
Or this has a phase two recommended.
Y'all need to be following upon this, because right now
you're not getting the money.

Speaker 2 (02:46):
So phase one what's involved in it?

Speaker 3 (02:49):
Phase one is a lot of record review.

Speaker 2 (02:51):
So it's not like you order it today and you have it
tonight.

Speaker 3 (02:54):
No, I tend to do mine a little faster because usually
when people contact me theywant it within a month.
Average time is like three tofour weeks to get those done.

Speaker 2 (03:06):
three to four, and this is one thing I like about
commercial it's not immediatetime frame, like I love
commercial companies.
Well, buyers, call it hey, Ineed a commercial inspection for
this, this warehouse or thisrestaurant and then a month
later in the proposal we writefrom like okay we don't hear
anything more like all right,maybe they didn't get it.
Yeah, three weeks a month later, hey, we're ready to schedule

(03:27):
that.

Speaker 3 (03:28):
Oh, okay, it's a different time frame, it's a
different business, it'sdefinitely more professional.

Speaker 2 (03:33):
People don't get stressed out.

Speaker 3 (03:35):
Because it's a money thing, does it make good
business sense.
There's not much emotioninvolved.
No, no much.

Speaker 2 (03:42):
So we know why a bank would want the phase one done.
And you said it takes likethree weeks to a month to get it
done.

Speaker 3 (03:49):
It can take up to a week to get the records pulled.

Speaker 2 (03:54):
Just a record pull.
Just a record pull is about aweek, so what records?

Speaker 3 (03:57):
So they'll go through federal, state, local databases
.
They're going to look for anyevidence of like underground
storage tanks, any evidence ofany leaking underground storage
tanks.
Is there anything that has beeninvestigated in that area in
terms of environmentalcontamination?

(04:18):
They'll look over things likethat.
And then, how close was it tothe property?
Was the property actuallylisted as an area of concern?

Speaker 2 (04:30):
So it's not just that address, is the buildings next
to them as well, and maybedepending upon geography, you
know, like, how, how does stuffflow?

Speaker 3 (04:40):
Did you have a chemical?

Speaker 2 (04:42):
plant uphill that that was leaking like a sieve
All those chemicals down to yourbackyard.

Speaker 3 (04:48):
Right Of your building, something like that.

Speaker 2 (04:52):
So we know why phase one would be ordered because the
bank doesn't want to be on thehook for it.

Speaker 3 (04:56):
Right.

Speaker 2 (05:01):
And she got to do the record pull.
That takes a while, but afterthat you you have to read all
those reports and then somesummarize.

Speaker 3 (05:08):
so the reports need read and summarized.
Usually the way I do it is Iwill make a quick, easy chart,
so just the stuff that'smentioned in the record pool.
If there's anything that comesup that goes into the chart and
if it's not listed then you knowdoesn't need it that's a chart

(05:29):
you created yes okay so um thenthere's also a site visit yes,
and I almost go out.
Yeah, yes, so we go out, we tagteam.
Is there water anywhere on theproperty?
Does the water look oily, likeit's got oil on it?

(05:50):
Is there an area of grassthat's not growing correctly?
Is the grass dead?
Is the grass even able to grow?

Speaker 2 (05:58):
If you've got an area where the grass is dead why
that's not good what is going on.
That last one we went to therewas a mud puddle in the grass.
It had oily scum on it.

Speaker 3 (06:12):
It was like a drain that had oily scum on it, and
then right beside that drainthere was a strip of land that
didn't have grass on it and itwas like all brown and dead.
And then the strip right besideit had grass.
So no grass was growing here,just like dead weeds and then
grass.
So, what's growing?

(06:32):
What's right here?
That's not letting that grassbe growing, so that one required
a phase two, all right.

Speaker 2 (06:41):
So you do the phase one, because bank doesn't want
to be on the hook.
Bank doesn't want to be on thehook.
Bank doesn't want to be on thehook In case they somehow own
the property themselves.
They don't want that.
Yeah, and so you do do thedatabase research with a site
visit.

Speaker 3 (06:57):
we find nothing there's so there's no
recommendation for anything elseto be done so that was like
that one condo um, the, the,that one apartment complex that
had like the five buildings,like, oh, they're like 200 units
in this thing no, no, no, notthe one I'm thinking of.
the one I'm thinking of the.

(07:18):
The guys commercial companybuilt them and he decided, like
he'd been building them allaround Columbus.
And then he decided, well, whatthe hell, why am I selling
these?
Why don't I just keep a coupleand rent them out?
So he had several of these thathe had rented over the years

(07:44):
and then he was starting to sellthem off.
They were only ever residential, they were only near
residential.

Speaker 2 (07:52):
So they were clean.

Speaker 3 (07:53):
That was the cleanest phase one I've ever done, so at
that point nothing.

Speaker 2 (08:01):
It's like a green flag for the bag.
My guilt early, good, yeah,everything was so you go for it.

Speaker 3 (08:05):
All right, so man with that trucking company oh
fireplace down by the river theriver very first phase one
assessment.

Speaker 2 (08:12):
I had to do so so this one, this was bad.
It was bad.
I mean, you walk around andwe're seeing 55 gallon steel
drums of like oil overflowing,leaking onto the ground.

Speaker 3 (08:28):
Batteries left around .

Speaker 2 (08:29):
Yeah, leaking batteries.
A homeless guy living in thewhich, not an environmental
hazard but we got.
You got a homeless guy livingin this car, in this.

Speaker 3 (08:38):
Sandblaster area.

Speaker 2 (08:40):
Yeah, oh, sandblast and had all that silica
everywhere, which I don't knowif that's an environmental
hazard by itself, but no, youshould not be breathing that
stuff in there it is.
It's exposed to the wind.
There were a lot of issues inthat place and it was near the
river yes, a major and riverwhat I love best about this is

(09:03):
that area had been in violationbut from the fda, from the fd,
from the epa, like years, yearsago took them years to get back
into compliance.

Speaker 3 (09:13):
I mean clean to get cleaned and then, guess what,
they were never checked on again.
So, like I'm coming in anddoing this like 20 years later
and there's been no follow-up,they just reverted back to their
old practices.
Everything was just leaking allover the place.
They had just trash all overthe place with oozing oil and

(09:35):
this and that, and so.
That was a phase two.

Speaker 2 (09:39):
Or another one we recently did or you did.
We get there to the site, wesee little scummy things, but
the big red flag that it shouldhave a phase two Is the history
of this place.

Speaker 3 (09:53):
Yeah.
Cause we don't want to get toomuch into that, because that
could narrow it down but anyway.

Speaker 2 (10:00):
So the history is very important.
You got all the databases, allthat.
So say we.
You find something, somethingpops up on the database or
something we observe, and theyhave to do a phase two.
What is a phase two?

Speaker 3 (10:14):
so phase two is a deeper record dive and actual
testing.
Now I don't know how much aphase two itself costs, but I
have been told that sampling canbe up to a thousand a sample
well, we have charged peoplethat much for samples, depending

(10:35):
upon the water quality testingthey're doing Right.
Well, yeah.
But phase two you're going toneed more than one, yeah you're
going to eat, so you.
This can involve uh materialsampling like you grab a chunk
of material, send it forasbestos testing maybe right,
you drill up, you do soil, youdo water testing um soil testing

(11:00):
mean you dig down, dig down,send it to the lab now I, I
think for, like the phase twos,I think it can go down to like
10 feet because, like I, I knowsome places where they've
replaced like up to eight footof dirt because that first seven
and a half foot wascontaminated yeah and I.

Speaker 2 (11:19):
If you do a soil testing for like gardening, it's
like eight inches is all youneed to go down to something
good, so not not not a very deepmountain you need to go to, but
man I'm thinking I'm thinkingthat garage and oil just sitting
there.
They need to go deep.
They probably have to go.

Speaker 3 (11:36):
Keep digging down all right till they hit nothing and
see how far down that is, andthen, yeah, so it's, it's
definitely interesting to lookover and learn about the
property and and see wherethings are yeah and not, and not
just anybody can do a phase oneinspection there is

(11:57):
certification certification is along process.

Speaker 2 (12:02):
Laura, being awesome, has that, so she can do that,
and of course, she hasexperience and I, and actually
you, consult with other peoplewho do that for other companies.
Right, it's strictlyenvironmental companies, right?

Speaker 3 (12:14):
Right, I do the phase one, so there's another company
that's out west.

Speaker 2 (12:19):
They double check your stuff in there.

Speaker 3 (12:20):
Well, and there's another company out west that
I've done consulting for, sothey'll do the phase one, but I
do the site visits for them andI fill out that part of the
paperwork for them.

Speaker 2 (12:35):
Yep.
So I've done that, you've donequite a few of those, I've done
quite a few for those.
So if you yourself or some ofyour clients is buying a
commercial property, have themcontact us.
We can do the inspection onthat and then do the phase one.

Speaker 3 (12:51):
We give a discount.

Speaker 2 (12:53):
We're doing the phase one, along with the inspection.

Speaker 3 (12:55):
for that there's a discount for that, because we
can definitely save it.
We'll just do it all in onevisit, which makes it a little
bit easier for everybodyinvolved.
That's all that works.

Speaker 2 (13:06):
That's phase one.
These are phase two.
Is there a phase three?

Speaker 3 (13:11):
No, I do have a company that I can recommend for
the phase two, the one thatI've been doing the consulting
for from Out West.
They do phase twos.

Speaker 2 (13:21):
So the phase two.
Then all right, test it.
We find some shit, clean it upand then probably the testing
for the confirmation has beencleaned up.

Speaker 3 (13:32):
I don't think the cleanup is going to happen that
fast.
I think what ends up happeningis they do the testing and,
depending on what comes back,then the EPA would get involved.
Then the EPA would get involved.
So if something comes back andit comes back hot, there's a
problem.
The EPA has to be involved.

(13:54):
And then they have to createsome kind of a plan, and I bet
there's more testing then,because exactly how deep does
that oil spill go?
Because then what they do isthey will literally come in and
they'll take out feet upon feetof dirt and haul it somewhere
where it gets cleansed or storedor whatever there are bacteria

(14:18):
you can put in the soil.

Speaker 2 (14:19):
that would eat the oil, right.
So there are bacteria.
You can stick in there andclean it up, but it's not well.
The government's not known forbeing fast and efficient, so I
imagine cleanup would take quitea while to do that yeah well,
remember that.
Well, that lady, that who'sgonna buy that first one, the

(14:39):
one by the river right, shewasn't gonna do a phase one no,
her bank didn't give her achoice her bank.
Her bank told her to.
Is that?

Speaker 3 (14:47):
right, yeah.

Speaker 2 (14:47):
Okay, that's a good thing, because she was, she
would have been.
She had a coach.
She had a coach trying to get,help her to learn how to invest
in commercial property.

Speaker 3 (14:56):
Right and he wasn't.

Speaker 2 (14:57):
He didn't say anything about the phase ones,
the bank required her to get one, the bank required she's lucky,
because that would have beencrazy, that would have been bad.
It would have been expensivefor her and it would have been
hers.
Oh yeah, yep, so I think that'sit for this one, right, you can
think of anything else.

Speaker 3 (15:14):
I can't think of anything else.

Speaker 2 (15:14):
Definitely contact us for commercial residential
phase ones, environmentaltesting.
We can do that so everybodyfeels comfortable with their
buying decision.
So, yep, I think that's aboutit.
Thank you everybody.
Bye.

Speaker 1 (15:31):
You've been listening to the Standing Out in Ohio
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For more, please follow us onInstagram, twitter and Facebook,
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(15:51):
That's J-I-M-T-R-O-T-H andclick on podcast.
Until next time.
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