Special financing creates value

[Marina Wong]

I am a first time investor in multi family. In the process of purchasing a multi family in Lowell, MA. The seller is financing at 15% down, 5% interest rate, 30 yrs amortization, 15 yr balloon payment. Due to this, the cash on cash return is almost 20%. However, what we have negotiated is higher than appraised value (from a buyer whose deal fell through). The negotiated price is also on the high end of value using gross rent multiplier. While it seems like a good value through the special financing, the value will not be there otherwise. The property is updated and fully rented in a relatively desirable neighborhood. I am comparing the return with other properties using 25% down current rate of 4.625% - 5%. Are there other financing options available? It seems that Marlboro and Worcester multi families do not have as high gross rent multipliers. Am I comparing apple to orange? Thank you in advance of your help.