Owner financing deal check – looking for experienced feedback on structure + rents

[Armando Marrufo]

Hey everyone, I’m newer to investing and wanted to get some outside opinions on a deal structure I’m looking at. I’m not trying to pitch it as amazing or force it to work — honestly just want feedback from people who’ve done owner financing before and can point out anything I might be missing.

The property is in Rockford, IL. It’s a 3 bed / 1 bath brick bungalow. From what I can tell, it’s been pretty heavily updated recently — new furnace, water heater, windows, kitchen updates, electrical, etc. It’s been on the market a long time (around 100+ days) and the seller is advertising that they’re open to seller financing. Asking price is currently in the high $80s after a recent price cut.

I’ve been checking neighborhood rent comps on Zillow. For 3-bedroom units in the immediate area, I’m seeing apartments listed around $1,400–$1,600 and a few houses around $1,300–$1,500. To stay conservative, I’m underwriting rent at $1,300/month.

What I’m considering (conceptually, not locked in) is an owner-finance structure somewhere around an $82k purchase price, about $10k down, interest in the 6% range, amortized over 30 years, with a balloon somewhere in the 5–7 year range. Buyer would cover taxes, insurance, and maintenance. No bank involved unless/until a refinance later.

The main reasons I’m looking at seller financing here are that the property has been sitting for a while, the seller already mentioned it as an option, and I like the flexibility compared to going straight to a bank. I’m planning to hold long term, not flip.

A few things I’m hoping to get feedback on:
– Do those rent numbers sound realistic for this kind of area, or am I being too optimistic even at $1,300?
– From a seller’s perspective, does a 5–7 year balloon usually feel reasonable?
– Are there any obvious red flags in this type of structure that newer investors tend to overlook?
– If you were the seller, what terms would you likely counter with?
– For anyone who’s done seller financing before, what would you personally try to improve or tighten up here?

Appreciate any insight. I’m trying to focus on downside protection and learning to structure deals correctly rather than just forcing something to pencil.