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I have been casually looking around the RE market in my area for the last couple of years and am just now finding myself in a position to make a move. The residential market here does not allow high enough rents to make houses a worth while investment. But just the other day I stumbled across a person I know that is looking for a commercial space that is similar to one that I know is for sale. The deal is a ways off, but I am going to run this past you all to see what you think.

The commercial space is 1350 ft sq. and is listed at $185,000. It has been sitting empty, in a high vacancy town (poor economy), for the last 8 months. It is in a two year old building and the space is strata title with four other 2000 ft2 titles in the building. The location is great with high traffic and good parking available.

It would be my first investment and unless I could work some vendor financing I would have to go with 25% down. I beleive that I could get it for $170,000. With 25% down ($45,000), $125,000 mortgaged at 7.5% for 25 yrs would leave me with a monthly payment of around $915 a month.

The occupant is a large investing firm that would be interested in the office for a somewhat long term lease (~5 years) for a satelite office. They are interested in putting some money into the space for improvements. Having a good location, a newer building and good parking I beleive that I would be able to get around $11-12 a foot2 which would be somewhere between $1230-1345/month on a triple net lease. If I end up in the lower end I would still be getting over $300 above the mortgage payment. I know that I have to be sure that I am getting a few extra $$'s to cover unforseen costs, and I think that $300/month would do it.

So.......let me know what you think! It seems like a relatively good deal for the area that I am in, but I am still a REI virgin so I though I'd check with 'The Fools' for your thoughts.


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