Multi-family Retail Investment

[Jacob Wiltshire]

My wife and I are starting our journey into real estate investing. We had planned to approach this step through multi family units under $200K within a 2 hour radius of our place, requiring a maximum of $5K worth of rehab. For all intents and purposes that is what we have been targeting.

However an opportunity has presented itself which feels like a cash cow, but jumps into a space I know very little about - retail.

There is an off market deal presented to me from an estate where the kids want to liquidate the assets and move on. There is a large building with three 1000sq ft apartments in excellent shape above a retail space. The math is telling me that this will net me a cash on cash return of around 80%, cap rate of around 18%, and monthly cash flow of $1000 a month. However, retail rents for $1200 so a vacancy there could put me into negative cash flow immediately- thereby my hesitation.

This is a small town with a population of 14K but also the largest town in the county so it does feed the other towns.

Would you jump in? What would you be looking for to finalize your decision?