The reason is a tenant might do shoddy work on the cheap side just to open and then try to pocket the difference in TI if you just gave them the money.When my clients buy strip centers you walk the units to see the level of interior finish quality.What I mean by higher cap is actually lower cap.

If you are not into maximum leverage I would sell and move on to the next one.There is no point in tying up dead equity in a property since its investment value will  kill your cash flow.

Thanks everyone for the input.We're certainly going to forego lending to them, and I told them already that the money in tied up in stocks and making more than 4%, they understand.  

No sense in tying yourself to the property longer than needed.http://www.2-10.com/

@Matt M. and @Bill S.Both your replies are in tie, comforting and what i wanted to hear, thanks for taking the time. 

Int is low and so are payments, I couldn't be more thrilled. 

I do not see the value in tying my time up selling the property, when I could be working on the next one.

I started looking at investing my savings and realized real estate is the best way to go, I began reading books and listen to podcasts religiously and guess which podcast I listened to the most :) .After returning to states I found these two old school investors (brothers) on Craigslist who were willing to CD out their 260k duplex near dt Minneapolis ( Marcy Holmes) for 10% down and 5.5% int, I knew just enough to jump on the deal and it worked out great.

The leases are generally very clean in favor of the landlord also since the developer was holding long term and getting the cash flow they negotiated more carefully and took their time.You need to add in TI (tenant improvement costs) and leasing commissions for the leases.Most important is to nail down rent per sq ft you can achieve conservatively in the market.

While something like 65% of ARV would be great, the reality is that something at 85% of ARV is pretty standard, and 80% of ARV is considered amazing.2) Have more cash on hand (either my own, or a partner that'd be interested in tying up some capital for years).