Thank you @Adrien C. That was all great info. The amortization tables I can get online pretty readily, but I am constantly trying to figure out that 12 month vs. 14 month vs. n months and what that percentage was based on and I THOUGHT you nailed it for me.
This is what I thought from reading your post.. Basically, to do an interest only payment loan - you decide on the longest hold time - say 18 mos - then run an amortization calculation on the amount, interest, and time frame, then the first month's interest is what you are paying each month for 17 months, then the balloon is full amount plus one more monthly interest payment.
However - when I just run an interest only payment calculator, It does not matter how many months I put the payments at, it comes up with $166. WHERE OH WHERE do they get that number? Eight percent of $25000 is $2000, not $166. How is that calculated? (I will do some googling while tonight as well to try and figure it out.
As for the friendship / partnership - I am not afraid of asking as we have had this relationship prior, in smaller amounts and always interest free for shorter terms. He knows the risk of investing in this property and I think I can convince him of the benefit of 2nd lien position. He knows he can foreclose if he wants :)
In the end I have calculated approx. 66% for vacancies, capex, insurance, taxes, repairs, etc. then subtracted mortgage. I am hoping to fill rent the units by the bed, to graduate students as it is very close to a local university. If I cannot, and I have to rent to two family units, then I have to buy this property and/or fix it for considerably less :) I will try that anyway, but my marketing will be to the university students first.
Thank you again for the great response.
Blessings,
Chris