Owner Financing for 5 years With Balloon Payment?

[Michael E.]

I have a seller that has agreed to owner financing on a few properties he owns. I have come up with 100% financing for 5 years with a balloon payment at the 60th month. Will I be shooting myself in the foot with terms like these? Does anyone have experience with this sort of agreement?

Thanks

[Matthew Crivelli]

@Michael E.

No one knows if you are going to shoot yourself in the foot. Is there a chance? YES. Could it also work out just fine? Also YES.

Taking a 100% loan on a 5Y balloon term in the current market conditions. I would label the transaction as HIGH RISK. The seller is likely thinking the same thing, he knows if you fold because you can't refinance or sell down in the midterm he has the ability to take back the properties after you paid them 5 years of interest payments. Sounds like a win win for the seller. 

I would have at least couple different iron clad exit plans in place if you do decide to roll the dice.