Mixed Used in NJ- Advice Needed!

[Andrew Schwartz]

Hi All,

My business partner and I are currently negotiating a mixed-use property. The property contains four apartments, one store front, and 6 individual garage spaces for storage. We are looking to acquire this property in the range of 450k-475k. We are allotting 50k for some cosmetic upgrades. Once all said and done, the rent roll will be $8,600/mo and NOI will be about $55,000. The cap rate for this area is 8% and is located in a B class neighborhood.

We are working with another investor and he has proposed structuring the deal as follows... He will be responsible for 80% of the down payment (25%) and funding the rehab. We will pony up the balance of the down payment (20%). Our responsibilities will include managing the rehab, marketing the property for rent, and property management. With that said, this will result in a 60/40 equity split; obviously, our investor in control.

We have been involved in REI for 11 months now and have one SFR under our belts- which happened to be a home run. This is our first commercial endeavor and certainly the direction we wish to move our business; apartment buildings being the goal.

We're new to the commercial space and are open to any comments/criticism you may have. I believe the deal to be advantageous, but curious to other opinions.