100% owner financed. Should I rent or sell with a wrap?

[Chris Majors]

I was talking to an agent friend on the phone today and she mentioned that she needed to do something about a property.  It has been sitting vacant for a little over a month and she doesn't to fool with it any more.  

The property is 3.5 acres with a 3 bedroom 1 bath 1000 sf 1974 trailer that has been recently remodeled and could be rent ready with less than $500.  The septic tank is about 5 years old and it was previously rented for $650/month.

The trailer has little to no value, but the market value of the property is about $35,000.

The property was listed for rent and for sale about a year ago, originally for $64,900, then dropped to $38,000.  They had a contract for $31,000 cash, but the seller had a delay in getting a title for the trailer, which killed the deal.  They did end up getting clear title.  

I asked her if she would sell to me carrying all the financing and she agreed.  This is what she offers:

$30,000 sales price

100% owner financed with 10 year amortization @ 5% interest: $318.20/month PI

My closing costs out of pocket will be about $500 and repairs are $500, so my total out of pocket is $1000 (theoretically). 

If I rent the property for $650, this is what I have:

Expenses:

$20/month hazard insurance on the trailer.

$42.83/month taxes

$65/month vacancy

$65/month repairs

$65/month capital expenditures

$65/month management (I will pay myself to manage).

$322.83/month Principle and Interest

Monthly Cash Flow: $8.97

I know This isn't a great cash flow deal, but I would essentially break-even until the property is paid off in 10 years if I held it as a rental.

The other scenario, which I am leaning towards is to sell to an owner occupant with a wraparound mortgage.

I could increase my cash-flow substantially, get a decent down payment, sell for a higher financed price, charge a much higher interest rate, and enjoy less management headaches.

If I sold on a wrap I could sell for 

$39,900

$5,000 down (tax refund time soon :)

$34,900 amortized for 15 years @ 12.75% Interest = $435.84/month PI

This would allow me to make money on the front end ~$4,000 and make $133/month cash-flow.

I could also play with the numbers a bit to make a higher IRR, but this seems like a doable scenario.

Would you buy this?

If so, would you keep it as a rental or sell on a wrap?