Rate to charge for selling on a land contract

[Scott Groves]

I have a house that I have been renting to a very good tenant for 4 years. They have talked wanting to buy the house. They said they missed an opportunity to take money out of a mutual fund to use for a down payment and will need to wait until the beginning of the next year to get it. Their lease agreement will expire at the end of July. I was planning on putting the house up for sale in June with a closing when the agreement expired. They called to me out of the blue to restate their interest in the house. The reason for the sale is to get my money out of the house that is out-of-state and make a nice profit. We talked about a lease-to-own and land contract arrangements. I want to set up the deal so they may be successful at applying and securing a loan so I can cut ties. What are the pros and cons of each deal? What is a reasonable interest rate for a land contract? I have also thought about offering a new one year lease to give them time to get their money together as a simpler solution for the moment.