Advice Please - Sell w/owner financing instead of renting? (sales, renters)

[skewzme]

My background - I own 20 rental houses, located mostly in a small working class town. I have a half million dollar credit line, and I can buy houses in this town and have them rent ready for $30,000 to $40,000 that will return $800 per month on average. Most of these houses have city assessments in the $80,000 to $100,000 range. Yes, the city is WAY over assessing property here. Most of these houses are HUD repos, which the city justifies it's valuations by saying it doesn't include HUD sales prices in it's assessments processes.
There are a LOT of renters in this town, many of which probably can't qualify for traditional home financing.
I am working on an idea for a business plan that would involve me selling and financing these low cost houses to people that don't quality for traditional financing. A typical deal would be something like this - I buy the house for around $30k, I put another $5k in renovations in it, and sell it at or slightly below city assessment at $90,000. Purchase agreement would also require $10,000 down, but knowing that most would not have this, I would offer to finance the down payment as well, over say 8 years or so, which would add an additional $100 per month to their payment. A 7.5% interest rate for 20 years would generate $725.00 per month, plus the $100 per month for a total of $825.00 per month in cash flow from that property. At my current 7% credit line interest rate, my cost to service the interest on the $35,000 would be $204 per month, generating a $600 per month cash flow on the property. I could also offer the customer an early buy out offer of the financing in case they eventually can qualify for traditional financing. Some fee would be charged for early pay offs.
The way I see it, I am in effect still generating the same cash-flow on the property as if it were a rental, but reliving myself of maintenance issues, taxes, etc,. and possibly having a much greater appeal to people needing housing by giving them a sense of ownership rather than renting. I also know in this town, a significant portion of my customers will likely default at some point, in which case I get the house back and start all over.
So, anything wrong with this business model?

[SmartMoney]

People with good credit (down to 600 score even) can get 100% USDA financing at 4%. USDA has income caps, so Fañnie has 3% down. You're looking for an angle to draw them to your home, but that could have unintended consequences. You need to check into lender laws. I know of one private note holder that won't touch anything with owner occupied loans because the rates he charges are considered preditory and his entire book of business could be open for examination by the CFPB.

[skewzme]

Thanks. Very good advice