Interest rate question

[Joey Garrett]

Hi,

I have been talking to a an owner of 2 commercial buildings, he is older and ready to move on from managing these properties. Both properties are currently full. He is willing to finance the property if I put down 12%, he will charge me a fixed 3.5% interest rate for 5 years with a balloon payment at the end of the 5 years. He will amortize it over 30 years. I am currently trying to obtain all the monthly costs to come up with a total monthly cost, I have more most of them. Rough calculations, I should net about $1400-$1800 a month right from the start if they remain full. 

Questions I have are:

- Should you expect to make a monthly profit when you first purchase a commercial property? Is that normal or usually expected to break even?

- What is your initial thought on the fixed 3.5% interest rate for 5 years?

- What is your thought on 12% down?

- What is your thought on the 30 year amortization, is that a good or bad thing? Obviously it keeps the payment low, I'm sure I could always pay more each month.

- I know you would need more information to give an educated opinion of the deal, but just looking at the rough terms what are your thoughts?

I've done a lot of residential investing, now trying to move into the commercial realm and it just would like some outside opinions and suggestions.

Thanks