In the case of the student housing there is no dividends until refi at year 2 then a large portion of principal is returned then divideds after that.

The recovery, if any, of a holder on a Note may be substantially delayed and substantially less than the principal and interest due and to become due on the Note.

On a 250k loan I can knock off about 3 years from a 30yr mortgage and save $14,000 in interest simply by paying my mortgage with my debit card and using the cashback reward as an additional principal payment.  

You are looking at this strictly through the lens of cash flow, which is typically the smallest compared to appreciation and principal pay down. 

The transfer should be a credit to the bank account, but the debit should be to Loan Payable for the principal amount and interest, and the rest to insurance and taxes.The LLC is a disregarded entity for IRS purposes and uses the owner's Social Security number to report on Schedule E, page one.

@Dan BlaylockWe are coming out with a new product in the next 3-6 months that will be very similar to a partial where investors will have ability to get principal and interest payments.

As they described it, the principal of the insurance earning interest wasn't diminished by the loan like, say, a 401k loan would be.

I am considering posing this as a zero interest deal, so the $72,000 ($2,000 x 36 months) paid in the 3 years leading up to the balloon would go straight into the principal, and so will the $17,500 down payment.

If it was a 30 year with 15 years left, that amortization schedule for your principal balance looks a lot different than if it was a new 15 year mortgage. 

As Greg mentioned above, the appreciation and principal paydown is most likely more than the "loss" of $600 per month that you are paying in.