On top of that, look into the actual risk of the property vs. the blanket statement of being in a flood zone.

I'm curious what people knowledgeable of the area see in the market when adjusting for risk (growth, crime, etc..)

but I will take a guess at what your askingif the developer is going to bust this into lots and you stay in you just lost your tax advantages and will be deemed a dealer at the highest tax rates.sell now no risk.. and best tax treatment you could 1031.if its one property and your saying should I partner and they are going to build an apartment on it and we will keep it.. that's different.. but you lose control because your now going to put a massive amount of debt on it.. all though in your area not too risky given market conditions.. and really depends on your developer  known, reputable and stable ?

They would rather skip the commission on one 'weird' deal than risk losing their license, obviously.

I am comparing opportunities in my home country with opportunities in the USA and I believe the latter offers more in terms of risk/rewards.Example in Belgium:In a median city you can buy a decent small apartment (700 sq feet) for ± 280.000 EUR (+ 10% costs and registration rights) = 308.000 EUR (=$358.820).

Return on Equity is always a great barometer to watch and to see if that equity could get better returns leveraged somewhere else, if that person is willing to accept the risk associated with it.

Anything non vanilla is very high risk for a lender because if the loan defaults and they have to take it back it is very hard to sell and re-purpose.Your terms do not seem that bad for what it is.

@Imthiaz Ahmed The 4-unit limit is I believe a Fannie Mae and Freddie Mac limitation: http://www.freddiemac.com/singlefamily/news/2017/1128_loan_limits.htmlAnything beyond that, and your investment is no longer backed by the government, which is why you can get the lowest rates on conventional loans (i.e. less risk).The question to ask yourself is, is a commercial loan all that bad?

The biggest risk around it in Seattle right now is the city council and their push for more rental regulations,  with several influential council member's stated ultimate goal being rent control.    

They need to carry basic hazard insurance while the builder carries the liability.