is it ever a good idea to pay 14% more for seller financing?

[Nilton Lisboa]

I am looking at a 29 unit apartment building (brick/flat roof) that is worth $2.2M.  It is 100% occupied and needs $100k in upgrades (value added items only) plus parking lot pavement of another $60k cost.  

The seller has offered to hold 85% of the purchase price with 5 year balloon, interest only at 5% rate, amortized over 30 years.  The catch is that I have to purchase the property for $2.6M. 

$318k  Rental Income

$121k  Operating Expense

$202k NOI

$110k Deb Service (interest only)

$92k   NET PROFIT

So for my investment of $390,000, I will get a sizable asset plus recover my initial investment in just over 4 years.

Any thoughts/comments would be appreciated.

Thanks,

Nilton Lisboa