Interest only note with balloon

[Peter Halliday]

Let me preface this by saying that I’m relatively new to note investing and have single digit notes under my belt. I’ve come across an interest only note that has a balloon. My guy is that this kind of seller financed note to a residential buyer has a lot of risk.

It seems vital to ensure it was properly originated. I’d guess a note like this has a lot more grounds my guess of having a long stretched out foreclosure due to the sketchy nature of this. It’s one things for hard money lenders to do this but residential In guessing courts don’t love.

Interested in some people with experience thoughts on the practice as well as how to price on the risk.