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Updated over 6 years ago,
Newbie trying to structure seller finance deal
Structuring a seller finance deal on a small MF property. Curious what the consensus is for how it should be structured and pros vs cons of the below example:
10% down and 4% interest only with balloon payment at 2 years or 5 years. Refinance with local portfolio lender at balloon payment and pay back the seller the principal amount.
Not sure if it is wise to be going 5 years interest only and building no equity in the property besides how much it appreciates and my down payment. Being that small MF in this area don't appreciate much, at 5 years I still won't have much equity.
Or:
10% down and 4% interest amortized over 30 years with 5 year balloon. Principal and interest payments for less cash flow, but at least I'm building some equity.
Thank you