Then the lender will borrow you the $200k at a very high rate hoping you fail to make payments. 

I am curious if the fees I am being presented are in line with market norms:lender app fee: $10,000Origination fee 1% ($20,000)Lender costs: shows a fixed amount at $10,000processing fee $895registration fee $10,000Title and escrow fees: $4,000 est.6.5% rate fixed at 10 yearsPrepayment Penalty: Yield Maintenance months 1-114 (1% minimum)Third Party ReportsApppraisal Required Engineering Required Environmental N/A Seismic Report N/A Market Study N/A Funded EscrowsReal Estate Taxes Required Prop/Liability Insurance Required Special Assessments N/A Ground Lease N/A Replacement Reserves N/A Required Repairs TBD Debt Service Reserve N/AWould love to hear your thoughts on this as well as what you think is appropriate fees for the freddie mac sbl program. 

Is the pre-payment penalty worth the lower rate you'd get.

Take into account variables like affordability, property taxes, rental regulations, and vacancy rates while doing in-depth market research to find viable investment areas.

well at this rate they will get this stuff cleaned up.. now is the time to purchase one of those for a deep discount :).. 

My ask is if this is a good financing model then what exit strategies will I have with interest rates being what they currently are and no realization of what they will be in 5-10 years went the loan is due?

20% down fixed rate 30yr mortgage How did you add value to the deal?

His mortgage with a 7% interest rate came out to be $2,200.

I have a home I am wanting to sell that has a great interest rate with a conventional loan. 

@Jeremy BourgeoisYou couldAlso refinance it from another lenderDon’t assume they will extend it as they could sell the note - or they also could increase the interest rate to whatever they want as they have you by the you know whatI would look to partner with someone on developing it