Seller financing case

[Demjan Van Der Kach]

Greetings,

I am new to notes and have a property I would like to sell. I am going to describe the "case" and would really appreciate your ideas on the seller financing route. 

The condo 3 bed 2 bath, 1150 sq ft is located in central Phoenix, AZ in a nice gated community. The HOA says the complex is 49% or less owner occupied. So, FHA loans are hard to get. The complex is well maintained. The unit is in a very good condition, has a garage. We paid 115K cash in 2012 and rented it out since than. Rent about $1150-1200 per month. Currently the comps for the same units (they don't get to the market often) 220-235K. We put the condo for sale on MLS for 229K. There is an average traffic but no offers. 40 days on the market so far.

I like the idea of selling but started considering seller-financing option that I have never done yet. My knowledge is limited and I would appreciate your input. 

I made some spreadsheet and ran a few numbers using financial calc... but the more I look at it the more questions arise. My plan A to keep the note (notes) for 2-3 years and than sell to probably an institutional investor. 

My current thoughts down payment 20-30% and the note for the rest 8.5-9% with the balloon after 5 years. Or shall I offer the 1st and the 2nd position?

Are the seller financing of condos with owner occupancy less than 49% difficult?

I am interested to learn about the tax consequences of down/payment/ installement payments. I hope I don't need to pay taxes until I "recover" my initial investment cost (that was 115K) or basis.

I am planning to talk to title company and probably lending attorney to "minimize the damage".

What is the closing costs for seller financing deal in comparison with conventional buy/sell transaction?

Thank you.