How can I determine which financing option is best?

[Anthony Campanello]

Hi Everyone,

First post on BiggerPockets so I hope I'm not overstepping with the question.

I am trying to compare two financing options for a 4-plex in NJ. The property itself is a vacant 4 unit that, after rehab (~$125K), should net roughly $7500 per month in gross rent.

The two offers I have come up with are as follows:

Option 1) Purchase price of $675k, 30 fixed rate mortgage @ 3.875%, 25% down. Including closing costs and fees, the out of pocket costs should run approximately $193k.

Option 2) Seller financed with a purchase price of $725k, a $300K down payment and 7 years of interest only payments of $1500 per month. After 7 years, the remaining principal balance ($425k) would be owed immediately. 

My question is how could I objectively compare these two financing options to determine which is the better route for me assuming the seller would accept either offer?