Seller financing on undeveloped land

[Chidera Ezeigwe]

I have recently come across some undeveloped land that I would like to purchase. Seller is offering 5% interest only financing with a balloon payment at the end of 3 years with ~1/3 of purchase price down. I would like to go in on this deal as it seems quite good. But just wondering if there are any pitfalls to look out for. 

Also, plan is to subdivide the land and build. Will I be able to do this while still under financing? Is there any risk to this? 

P.s there are also properties on the land generating some rental income. This should help offset some of the interest costs but want to make sure that I will have claim on the rental income. 

Thanks in advance to anyone who responds!

[Bryant Brislin]

Those sounds like good terms. Ask for no prepayment penalty in case you entitle it sooner than the three years and want to get a construction loan.  Or if seller wants all the interest they would have gotten paid, then maybe it makes sense to agree to that. Yes, you can work on a subdivision, especially if you let the seller/lender know your intent, since some jurisdictions require that the lender of record sign the map before it gets recorded. Yes, the rental income would be your's.

[Chidera Ezeigwe]

Got it. Thank you!!