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Updated about 2 years ago,
Seller offering to hold a note on 3 duplexes
I have a potential deal in which a seller is selling three duplexes and is offering to "hold a note" for 20% down of the agreed upon purchase price, on a 5 year balloon at 10% interest.
First, I think "hold a note" means that this is a seller financed deal, right? Or maybe they're just agreeing to finance the 20% down? Can someone clarify what this means.
I've looked up that a 5 year balloon means the entirety of the loan will be due after that 5 year period is up. So the mortgage looks like a normal loan for 5 years then "balloons" to the remainder balance becoming due once that period is over. Is that right?
Assuming the properties are in good condition, in a desirable location, and cashflow well, how good a deal is this to start out my portfolio?
Any help is greatly appreciated. Feel free to dumb it down for me, too. I'm new here.
Thanks!