Seller is carrying back the rest at 5.75% (seems a bit high but no origination fees) on a 1 yr arm (he has one year left on his arm with the bank)...at which point the rate would fluctuate based on his bank loan. 

I didn't watch the video so don't know if the presenter was suggesting an ARM.

Expect an ARM and/or points upfront and/or a higher rate.... 1 or 2 out of the 3.

For example they may require it to be an ARM with a larger downpayment.With new construction, you'll want to have a plan for how to finance the build and also make the loan payments, while the property isn't generating any income in the mean time.All the best!

They also typically have balloon payments are the end and are ARM loans.

Most failed during the interest rate increase with ARM, interest only(most risky) if borrowers have no income.

Current home was also 5% down, 5/1 ARM, for $293k.

Oh also, the 4.375% is a 7/1 ARM 30 year amortizing, which is not as good as you got but still not bad.

I read the arm length addendum, so I can't buy the property since I am a family member.

If you find a good deal you can probably find a hard money lender but they charge an arm and leg sometimes.