The main issue I have is contemplating the baloon payment at the end of the 2nd year and refinancing the remainder with a bank...how can I compute that into calculating the IRR?

If you and your wife are up for that it is a great option to grow your net worth without over leveraging which can end badly.

But wanted to say that I highly recommend checking out REIA for Oh and/or Cincinnati and Dayton.

They market and sell the lead to an end user. 

Highly recommend.

He gives out a code at the end.

It feels like the focus has shifted from creating value to chasing quick payouts, with little regard for the end buyer.

In the end we presented evidence that no buyer would be able to finance it and got them to agree to 85% seller financing. 

During the "fix up" process, you would use a different kind of loan that will end up converting to a DSCR loan once you have tenants living in the unit(s).So, I would need to use maybe a construction loan for the renovations and then convert it to a DSCR loan?

Is it possible that at times you lose money (such as soft costs - paying for property inspections for example and the deal ends of falling through)?