Small Town Office Building

[Rob B.]

Hello All, 

My wife and I own a property management company in San Jose, CA and we're looking at buying an office building that is also set up where we could live in it. We could easily rent out our primary residence and make $700/Mo over the mortgage payment and use the SBA loan to buy the building with only 10% down. It's zoned commercial and residential. The building is in Scott's Valley, which is about 20 min south of San Jose. We currently live in San Leandro, which is 30-1:30 away depending on traffic. So the building would cut down on my commute because its closer and also because the 17 N isn't as bad as the 880-S. 

My hesitancy is this: Scott's Valley is a small town (11,500) and I'm worried that when we're ready to move on, we will have a hard time leasing or selling it. All of my rentals are in large cities and I know that I could sell them all quickly if I were willing to take a cut on the price. But in a small town, even at a good price it could sit for months. The current seller is rapidly dropping his price because he needs to sell. The advantage of the SBA loan is that there is no balloon payment, so I don't need to worry about that. 

Aside from the fact that it is in a small town, it is also a rather interested layout. It's about 2,000 sq ft with a lot of storage underneath the house. It could be divided into two separate areas, one of which could be a photo studio and the other an office. Seller is very motivated and I think that I could get a good price on it, but I don't want to be in the same position in ten years. 

If it helps, we have four rental houses, our primary residence and a 16 unit apartment complex, all generating good cash flow. We also own a profitable property management company that handles about 110 units, so we could carry it for a while if things went south for some reason.