Fast growth can be dangerous and very expensive.

They might not feel like it's really an issue until they are actually in danger of losing the property.

Is it dangerous?

First, using a Qualified Intermediary that rarely does them is dangerous.

At the very least your are cutting into your margins at a dangerous rate.

I can drop it as low as about $460k before I'm in danger of losing any money on the deal (I've got somewhere between $120k-$170k of equity, depending on actual selling price).My question is, what now?

And if you don't have a firm plan of paying them back it might get really dangerous. 

Thats a good point @Chris Seveney, I attended a seminar on notes investing in my local REIA and the speaker mentioned something about the dangers of inviting on out of state notes because of tax implications.

very old and tried scheme.. fraught with danger.. you have too many people that could default.VERY risky for the original seller.. but then again many middle men that do this could give a rip about their sellers as long as they made some money.. ( not pointing fingers at you of course) but this scheme unfortuantly is full of crooks.. 

Shirley,You only know enough to be dangerous.