We are paying cash to him every week or so when he sends bill. 

I don't really want to go looking for the financing to pay him his balloon payment.

in 3 years you can pay off any mortgage 500,000 or less for $1,500 bucks.. or in 5 years a $477,000 mortgage for $100..I am implementing something new for the real estate industry, primarily to mortgage holders & the rent to own industry, as a shorter-term approach to be mortgage free, without cost being an obstacle ..

That will increase your material costs for the job and is the contractor paying for the material in their bid or are you paying for it and paying them a labor cost.

- If i Sell , as this was my 1st house and lived in 4 years, do i need to pay capital gain tax ?             

I know they say you get what you pay for but I am impressed with this STR PM, and I use Steesa and Innago. 

My experience in Massachusetts, where it took nearly a year to evict a non-paying tenant, has made me more selective about the locations I invest in.I am looking forward to learning and sharing insights with this community! 

Keep in mind of the I/O(payments/period) and game plan on how fast you'd like to pay it down. 

Purchase price: $275,000 Cash invested: $294,000 Sale price: $355,000 Seller was behind on pay HOA payments and in risk for losing the property.

Regarding your other questions:  - If the going value is $260/SF, why would you pay more than that?