IS THIS FEASIBLE? ARE THE NUMBERS REALISTIC?

[SHAW ALI]

Example:

1. Seller owns an investment house FREE and CLEAR. 

2. Seller bought house 6 years ago  at $350,000 as investment property.

3. Market price now $550,000 

4. Seller refi's at 70% LTV = $385,000, 30 year at 5%; PMT to bank = $2067 per month

5. Seller sells house at $550,000 receiving 20% down = $110,000

6. Carries $440,000 Note on balance amount 30 years, 8%; PMT from Buyer = $3229 per month

7. Assume for now Seller manages  Due on Sale situation 

8. First Year Interest paid to Bank = $19,121

9. First Year Interest Received from Buyer = $35,067

10. S/L DEPRECIATION ON INVESTMENT PROPERTY FOR 6 YEARS TAKEN

11. 1ST YEAR REDUCTION OF PRINCIPAL TO BANK = $5,680

12. 1ST YEAR REDUCTION OF PRINCIPAL TO BUYER = $3,675

QUESTIONS:

1. WHAT IS THE CAPITAL GAINS TO BE REPORTED THE YEAR FOLLOWING THE SALE? (ignore depr recapture to make calc easy), AND EVERY YEAR THEREAFTER (don't need a number here just the concept what/how cap gains would be calculated each successive year)

2. WHAT WOULD BE A REASONABLE INTEREST RATE FOR A NOTE IN THIS MARKET WITH A 20% DOWN? 6%, 10%, 12%? 

3. WOULD IT MAKE SENSE TO CARRY A SHORTER TERM (12 -24 MONTH) SECOND IF BUYER CANNOT COME WITH 20% DOWN, SAY IS ABLE TO COME WITH 10% DOWN, AND BALANCE IS THE 2ND TD.

4. WOULD A 5 YEAR BALLOON BE WISE FOR THE SELLER WHO IS RETIRED AND HAS NO OTHER INCOME EXCEPT SOCIAL SECURITY?

5. WHAT WOULD BE A NOTE RATE TO CHARGE BUYER (WITHIN CONSTRAINT OF 2 ABOVE)  FOR MAKING TJE RE-SELLING THE NOTE ATTRACTIVE IN THE NOTE AFTER MARKET?

6. WHAT ARE THE PITFALLS, ILLOGIC, BLUE SKY ASSUMPTIONS IN THE ABOVE EXAMPLE? IS IT DOABLE?

7. WHAT IS THE ROI OF ABOVE TRANSACTION?