Posted by dewCO on December 01, 2000 at 10:42:01:
Rick, you make your deal “going in”. Meaning you need a good deal when you buy so that when it’t time to get out, you have a way out that preferably allows you to make money.
You can pay off the balloon at the due date, or before (if there is no prepayment penalty). You pay it off by cash out of pocket (yours or a partner’s) or by selling at a higher price than what is owed and keeping your profit, or by refinancing the property. Or for that matter, extending the term of the due date on the balloon.
#1-depends on when YOU pay it off. What are YOU trying to accomlish. Read the guys success story down below a few posts. He’g got a 1 year note, but he’s going to sell that house as soon as he does some repairs and then pay off the note. Maybe a month or several. He made his deal going in by finding a MOTIVATED seller and buying for way less than market value. He doesn’t need to wait for appreciation or anything else to make this deal better. (But YOU could wait if you wanted to.)
#2 There is no gamble in if you make your deal going in. If you buy at market value and you are depending solely on appreciation to get you out with profit, then yes it is a gamble. Hope this helps.