They both had money saved & our corp financed the balance @ AFR's. 

You should check out, via your mortgage broker, the Fannie and/or Freddie Small Balance loans. 

The Cash Flow is ridiculous.Over time, you get to understand that Cash Flow is something that only stays the same if you invested in something that is designed to do so like a Coupon Bond.Because I calculate the FUTURE Cash Flows out 10 years, I fully understand the true return of the Investments and how much cash flow I will achieve.The other thing to take into consideration is the Mortgage Balance reduction.If your investment is at break even but your Mortgage is a fixed rate, then one day, when that Mortgage goes away, your Cash Flow increases tremendously.When you take into account a 30 year projection of your Investment Cash Flows, you realize just how wealthy you can get by buying for FUTURE Cash Flow as opposed to Cash Flow NOW.It's really not RIGHT to pretend that the Cash flow you receive at the purchase is going to be the same throughout the holding period of the investment.

Good balance of cash flow/appreciation.C class: Bit more transient, properties are not as well kept.

ARV about 40-45k)BUT the seller has a mortgage balance of 36kBought it 11 years ago for 48kInterest rate on the note is about 7%Since the purchase price is less than the mtg amount what is the best way to structure the financing for the buyer?

So I don't lease my own units but I keep track of tenant payments, balances due, repairs, ect. 

They proposed the following with seller financing:Purchase price of $165K$25K down paymentLoan at 7%, amortized over 30 yearsMonthly payment of $875 (actual payment amortized with these #'s would be around $935)Balloon payment for balance in 5-7 years.My question to the BP community is what do you think of these numbers?

From my knowledge, the most that any lender would offer would be 50% of the loan balance, but this is for a performing note. 

Maybe he carries the entire balance, but gets a premium every month based on rents?

I do feel that stress testing a balance sheet is the only way to really look at systemic and catastrophic risk, especially in situations where effects of risk to repay is not independent.