Sounds to me like it would be treated as an investment and reported as an investment sale. Your fix-up costs for this flip would be added to the cost basis of the property, whereas things like property taxes and insurance would be carrying costs.
One word of advice though.
I have rarely heard of an owner financed sale of real estate working out. From what I know (which is not much) when it comes to seller-financed loans on real estate, there's a 50% change the buyer will default within 2 years and you'll end up taking the property back. That percentage goes up to over 90% before 5 years. Things happen. People lose their jobs, or have other unforeseen circumstances where they can't pay, a wage earner dies, etc.
So with the sale of real estate, make absolutely certain you have your ducks in a row on the legal front with the sale, Expect you'll have to foreclose on the property before the 5 year mark. (you should plan for it, but that doesn't mean it will happen.) Doing so will make the foreclosure process less painful for both parties. (But it's still gonna be painful, no matter what you do.)
