Evaluating Owner Financing Situation

[Conor Neville]

Hi all - my business partner and I have found a nice property we are interested in and are trying to decide between a conventional 30 year through our lender, or the owner financing offered by the owner, which is as follows: Price is $280k, would need to put 30% down and it would be amortized over 15 years at 1% below market rate. My realtor suggested offering it amortized over 30 years with a 15 year balloon, as that what she sees her other investors doing: focus on the cash flow, then when the 15 years is up, do a cash out refi, exchange, or sell to move into something bigger or better. We hadn’t considered the idea of a balloon when starting our investing journey and we’re happy to buy, hold, rent, and let it appreciate while we pay down the 30 year mortgage. My question is what are your experiences with any similar situations, are there any other points we should consider about the balloon vs the conventional, and what would you do if it was you? Appreciate any feedback or thoughts you might have!