Regarding the set-up you described - 5, 4-unit buildings - in 2012 I was able to get the same thing treated non-commercial via a regional lender in TX.   

Is it possible to get a loan for a LLC for a non-commercial type of property (SFR or multifamily less than 5 units) without a balloon payment?

Even if I'm the minority the practical reality is that non-commercial residential properties are valued by comps.  

The smaller properties have not required a seasoning period with the two lenders I have worked with on these (4 units and under which is non-commercial).  

Once a price has been agreed upon, what are the steps to acquiring land. Also does the lawyer draw up the contracts? Any help would be greatly appreciated!

Or do you think that the current owner is trying to set a valuation using a cap-rate on a 4-unit (non-commercial) property?

They have appreciation, likely a very low mortgage rate (for non-commercial property) so they might not have the motivation that you'd want.

There is (in my mind) a distinction between commercial multifamily and non-commercial multifamily (along with SFRs).  

If you are expecting to live in one unit then it is likely that any 1-4 unit property will not have positive cash flow.Most non commercial properties do not cash flow.

I'm pretty well versed on the non commercial residential side but this is my first commercial residential deal and i could really use help from the gurus to explain whether these terms make sense.Terms:Purchase price: $299,000Loan Amount: $224,250Loan to value: 75%Term: 20 year with re-pricing every 5 yrs based on 5 yr treasury + 3.50 marginAmortization: 20 yearFee: $1,125Rate: 5.50% for 1st five years prior to 1st re-pricing.Questions:1.