1031 Residential to commercial

[Michael Willis]

Hi all, I am the holder of residential real estate in JErsey City NJ. The entire city has seemed to go so expensive it’s almost impossible to find cash flowing residential props with any financing component. Caps are hovering around 3.5-5%. Thus, I am looking into other options. I have come across a class C office building in a nearby city center, with parking. It’s 14k Sq ft, has an elevator, is has off street parking, is occupied by a mishmash of tenants, and is marketed to have about a 7.8 cap at ask and is walking to the county courthouse. The office building needs cosmetic work, which might be a value add play to raise rents, but is otherwise seemingly modern. What are my reasons to jump from residential to office? What are the pitfalls? How will I find office different or better to residential? One of my biggest concerns is to go from an ultra hot market to a less so and different one.