Deal Anaylsis for this commercial property

[Orkeem Davis]

The property is a 3 unit - store front, 1st floor 1 bed bath, and 2nd floor 2 bed 1 bath -- $1500 monthly income.  The owner owns free and clear and willing to carry mortgage. 

I offered full asking price of 125k with 10% down @ 0% rate for 8 years 

Security Deposit - $500 

Financing $112,000

Principle - $1186

taxes -$300

insurance - $81

Monthly payment - $1567

Rent rolls can not to changed or increased for another 6 months.  After 6 months, I will more than likely receive an additional $400 to $600 in rent increases, but not guaranteed.  Rents are really low and still waiting for Contract approval.   Appraisal will be a little costly, but required from me to know value prior to closing.   Closing costs, down payment, appraisal will cost around  $18,000 to $20,000.  Is this a good deal for me if approved?

[Pat G.]

@Orkeem Davis I am confused by this deal. I hope that you amortized this over 30 years and not 8? I would make sure that your exit strategy is clear as far as a loan. Meaning make sure that you can go to a commercial lender and not a residential lender. As the others have stated never buy a property in the "hopes" of raising rents. My experience has taught me to buy on what the property makes today, not tomorrow or in 4 months, because I can guarantee that will be the longest 4 months you have even seen.  I am not a broker, lawyer or professional, just somebody with a ton of experience. Also, it sounds like you don't have an attorney on your side -I would never sign a document that somebody else's attorney drafted without having my attorney look at.

What are the taxes going to adjust to once you purchase the property? Just my two cents.