Private / hard money financing a multi-family

[Matthew Lefkowitz]

The opportunity has recently come up to purchase a turnkey off-market duplex in a midwestern city for $560k. Assuming 25% down ($140k), my estimate is that this would cash-flow ~$13.5k per year.

While I can afford to come up with the $140k down, I'd be looking at financing any portion of the 25% down with private / hard money.

My estimate of appreciation (3%) supports financing the entirety of the 25% down with a 7 yr balloon structure (refinancing at end of year 7 nets roughly $140k... enough to pay back the balloon payment). Even at 8% interest rate on such an agreement, this would cashflow $2.5k annually.

How have you seen this type structured in the past? Is the structure laid out above (7 yr balloon, 8% interest) reasonable? How much "skin in the game" will an investor need to see? What other options may be reasonable?