Advice on Doctor Office Deal

[John White]

First post - I've learned a ton here so thanks to everyone!

We're considering our first commercial property investment.  We've negotiated a deal on a building in a very affluent area of my home town for $385k.

The tenant has two years remaining on the lease and is paying $4k/mo rent. I would pay taxes and insurance only. The tenant pays everything else (utilities, maintenance, etc.). The NOI is 9.5% which is very competitive for the area.

The only questionable thing with this deal is the current tenant seems to be paying above market rent.  Based on other rents in the area, a market rent could be as low as $3k/mo. 

Our plan is to (during the due diligence period) offer the current tenant a slight discount to extend the lease to five years and try to feel out how long they plan to stay.  The tenant operates a specialty medical service that draws patients from the entire region and they seem very happy with their location.  If the tenant extends then we do the deal, if not we bail.

I'm happy with the NOI but unsure how to factor in the potential for lower rent if the tenant leaves - How would I factor that in? How else can this not go well for me?

If it helps, I'm looking for income properties to eventually replace my W2 income so appreciation is less important than income stability.

Thanks for the help!