% interest to charge for Land Contract

[Nick M.]

A tenant is interested in buying the house he is renting from me via Land Contract. I have not done this before and would like some opinions on what to look for and how to set up the payment?

I am curious what common interest rates should be charged for a land contract - Credit is not the best, they cannot apply for a mortgage so I will finance. Is 6% too low, 9% too high? What about the price of the house? Should I charge a higher price because of the risk I am taking with selling it on Land Contract?

Should I be cautious and collect money for insurance and taxes any pay it myself of let them pay it and I will only collect interest and principal?

Any thoughts are appreciated...as you can see I am new to this and maybe some of these questions are trivial but trying to be on the safe and legal side.

Thanks in advance.

[Rob Gillespie]

Nick,
I would do a Lease with an option to purchase on two separate docs.
A land contract could require a foreclosure to get the buyers out. A lease Option is usually an eviction. Plus the tax consequences for a land contract are not as sexy for you like a lease Option.
Now with that said, if you are gonna ignore me and still want to do a land contract, I would charge 18%. That is what I charge when I lend money. It is all about the availability of the financing, not the cost.
If they are not happy with it, tell them that rent is 100% rent, you are saving them 82% on your program.
Good luck!!