Exit strategy for owner financed deal

[Archie Minkowski]

All-

Would appreciate help gaming out this deal...

My partner "Chuck" and I recently purchased an estate home in a rapidly improving area for $350K cash provided by a long-time investor friend.  It is turnkey and ready to sell or rent.  The current market value of the home is $400K and if interest rates drop we expect the value to rise to the $450K level. 

Owner financing is one of our business models and a very qualified buyer offered us 4% cash down and 7% interest for 30 year note.  The buyer has been vetted and can handle the payments.  

I understand we could sell the note at a discount down the road but would prefer to have the buyer eventually refinance out.  

-  Should be counter-offer and require a balloon payment after 12 - 24 months?  

- Say we want to hold the note for several years but get our financier Chuck out of the deal. Is there a way for us as the bank to refinance the note and pay him off, then continue collecting mortgage payments? Can DSCR loans be used for owner financing or rentals only?

Thanks for the continued wisdom.  

-Arch