Sale by Owner - Note held by Owner

What are your overall thoughts on buying a house, and having the owner hold the note? In this case the 3-Family house is going for 1.1 million. The owner is asking for 5% down, roughly 55K. Is this a good idea? http://www.ahrlty.com/H-155Y/H-155Y.html 1. Are the new tax breaks for homes still in effect for a purchase like this? 2. Is this a good idea, bad idea, list your pros and cons... I would rent two floors and live in the 3rd. The property looks like it has good bones, and is in a good area. Maybe I am fooled, but this looks promising to me... Although the price has not come down in the last year I have been watching it...