Best Way To Handle a Bad Situation

[Teresa Ludlow]

I would greatly appreciate some advice. I own a property in Arkansas (1300 miles from me) free and clear that was bought for $215,000 as a primary residence in 2008. It is a large SFR on almost 50 acres in a rural town with a poor economy. Because of this, I haven't been able to sell the house due to the lack of qualified buyers in that market. I have rented it for a few years in hopes that the market would come back but the return is poor. I have it listed with a local real estate agent now at $199,000 because I can put the money to better use elsewhere. I am wondering about other options.

I am considering selling the house and 3 acres and owner financing that.   I was thinking that I could sell that for $150,000 with 10% down and 8% interest and no origination with a payment of $991 before taxes and insurance.  I could amortize it over 30 years with a fixed rate for 5 and a balloon due then at which time I can either keep the note or let them go elsewhere.  At that point I will have made $52,000 in interest, $15,000 in down payment money, and the payoff at that point should be $128,000 for a total of $195,000.  

I would still own the land, which I have considered either selling as a whole or subdividing it into 5 tracts of 5 to 10 acres each (part of it is on a substantial hill).  There is no highway frontage for any of the property, and no improvements to the land but there is rural water and electric 1/4 of a mile away.  I should be able to get $12,000 to $24,000/parcel for the land as a cash sale or I could owner finance that too.  

Would it be worth it to do this at such a distance or should I cash out at a loss and recoup the difference in my local market?  Please feel free to throw other ideas at me that maybe I haven't thought of yet.