Why not do this deal?

[Matt Dawson]

I have a seller willing to take a 20% seller carryback and a bank willing to take the other 80%. It's a 3.5 million dollar 104 unit deal with an NOI of $276k. The debt service will be $240k per year with the terms agreed to. So, with a $36k per year cushion, it seems like free money. Obviously, bad things could happen, but I'm able to absorb another $100k per year in a disaster scenario. The biggest issue I see is the 5 year balloon on both deals, but I feel fairly comfortable with being able to refinance into a single loan at 5 years as a significant amount of the loan will be paid down.

Can anyone talk me out of this?  What minefields are lurking?

Thanks!
Matt