Carrying a $200k note: is the plan the payments or the lump sum?

Simple numbers so anyone new can follow. Sale at $240,000, buyer puts $40,000 down, I carry $200,000 at 8.5 percent, amortized over 30 years with a balloon at year seven. Payment works out to about $1,538 a month. Interest only in the first year is roughly $16,900, and after 84 payments the balance owed as the balloon is still around $186,000, because a 30 year schedule pays down almost nothing early.

So there are two different assets sitting inside that structure.

One is income. I collect $1,538 a month for seven years, the house secures it, and my loan to value at creation is about 83 percent, which is my cushion if the borrower stops paying. Nothing to do but bank the payments and watch the taxes and insurance stay current.

The other is a lump sum. A note buyer purchases the remaining payments, and because they want a higher yield than 8.5 percent, they pay less than the balance. The bigger the yield they need, the less cash I see. In exchange I stop being a lender and get capital back to redeploy.

There's a middle option people forget, selling a partial. The buyer takes the next, say, 60 payments and the note reverts to me after that, so I get cash now and keep the tail.

I don't think one of these is correct. It depends whether the cash has a better job to do somewhere else. Curious where the room actually lands.