selling with owner financing!

[Mike Landry]

Hi guys.  We are looking at selling a condo we own in galveston and we are advertising that we will consider owner financing.  It is a vacation rental and will be sold either to an investor or someone for a second/vacation home. Traditional lenders won't touch these properties.  Here are the numbers(rounded for simplicity) and a couple of question afterwards.

Currently we owe $35,000 on a privately held note at a local bank, 15yr note, balloons in 3.5 years.

selling for $60,000.

My goal for financing terms: at least %20 down, 6% interest on a 15 year note.  This would almost get me everything back that I have put in it and then earn a $100 spread per month.  

1. Am I correct to assume I would need to find a title company that would do a wrap on this property and risk my loan being called due?  We do have the capability to pay it off.

2. How do you legally set up a note?  lawyer? title company? pen and paper? Do the fees involved make it not worth it on such a small amount? Are there servicing companies that take care of all that for a fee and is it necessary?  I'm pretty good with amortizations.

3.  Foreclose (not that I want to)?  I know how the Texas auctions work when buying.  But how does it work when you are the bank.  Are lawyers and trustees required or is it something a capable person could stumble through if they had to?  

4. tax consequences?  Maybe more of a question for a cpa but how in the world does it all work in these situations?  When the property is sold am I considered paid out and owe capital gains on sale price less my basis (even though I never received the money).  Then I set up a loan where the interest is taxable as interest income (regular wages or capital gains?)  

5.  Am I making this sound more complicated than it really is?

I know it would be easiest to sell it out right but I think we could get a little more money and learn something in the process.  Thanks!