Owner Financing - how to sell the note

[Grace B.]

Our family has rental properties,  we are selling this rental property to the tenant.  This weekend we signed a draft with tenant/buyer that we agreed to sell at $290,000, $20,000 down, 8.25%, 30 yrs amort, 5 yrs balloon. Tenant has been renting for 1 yr now and has been paying rent on time, kept house in good condition (I am lucky). The new monthly will be a little less than current rent. They are aware we will sell the note. 

The tenant/buyer are a couple, the husband has credit score of 680 (accordingly, the tenant will provide me a 1003 loan application form filled) We have not sign any formal document (promissory note, deed etc) yet. I am looking for 1. advice of put together the contract and supporting document in preparation of selling the note before or after  closing the transaction 2. find a note buyer, property is 10 miles east of Downtown Dallas off I-30.  

In addition, we (my family) have a few questions: 

1. Do we need to transfer title to the tenant at closing? or is it better to do Lease Purchase for the time being till we have a suitable note buyer?   The property is in Texas. 

2. If tenant/buyer do buy title insurance, should title company leaves it open till we find a suitable note buyer so tenant/buyers don't pay twice? in two transactions?  

3. Which of the two,  5 yr balloon or 10 yr balloon is preferred?( with no pre-pay penalty) when selling notes.

Anything else do we need to be aware of during this time, going into the closing?

[Rob Massopust]

Why are you carrying back a note on this. Much easier and better deal for tenant to get an FHA loan.

You are going to sell the note in what seems a short time and with no seasoning you are going to get a hair cut.

Tenant has 680 with almost 10% down should be able to get a loan around 5% and you get full amount with no discounting.