It was suppressing the current condo rental market a bit based on our experience.

that takes a special appetite.

Even assuming lags between interest rate and cap rate changes, analysis found no statistically significant relationship between the two variables.These findings confirm that cap rates are influenced by a wider network of variables beyond interest rates, including real estate fundamentals, capital flows and investor risk appetite."

Anything under 1 million in commercial there is not much appetite for lending.

He's not a RE investor, but he has about $1M in his Roth.He's getting a bit nervous about having so much in equities, but doesn't have an appetite for becoming a landlord. 

In a broad reply to your post - this decision will ultimately be driven by your risk appetite, so there is no right or wrong here necessarily.

I recommend contacting at least three lenders to get an idea what the market rate and appetite is for your loan.Agree on terms.

During the last recession, none of my lenders had an appetite for commercial multi-family anymore,  no matter how good the buyer's credit profile or how large the DP.  

One thing I would consider is that when an industry has very few barriers to entry, there is at least a potential for a lot of competition, price suppression, and degradation of the industry's integrity due to low-skilled entrants.  

@David Lucas Depends on your appetite for risk.