1. You see a large glut of commercial real estate in your town and a realtor you know talks to you about buying a small strip mall at a discount rate of 10%. You toss the idea around with Mary and here are the choices you decide on. Which one would you pick?

1. 10% is a nice return given the 1% T note rate which implies a spread of 9%, and if you wanted a return of 12% you would be paying more for the strip mall
2. Having low vacancy affects revenues which will affect the denominator of valuation models.
3. Real estate is not a good investment under any circumstances
4. If I feel there is way more risk than my realtor says than I should want a return or discount rate of lets say 15% or more meaning Id pay less than the original asking price.
5. None of the above