Selling rental house on a land contract questions.

[Miss Prim]

Hi all.  Just some background and questions.  My husband and I are 61 and 65.  We have had a single-family rental property for over 30 years.  We just did some sprucing up in between renters and since we have been having a hard time finding anyone to rent, we just visited a Real estate company to list on the MLS for rent.

The broker we talked to owns a small independent real estate office and is very familiar with the area.  We also talked about possibly selling the property on a land contract.  We really would like to be done with renting it, but do not want to get a lump sum for it and would prefer to receive payments with interest.

My question is, what should we ask for a down payment and I would like to hear of others' stories about
selling on a land contract.  The broker seems to have done a lot of land contracts himself and suggested we could get 6% to 6.5% interest.  We would be happy with that.  Basically, we would like to replace most of the rental income and not have to fix it up anymore.

Thanks for any comments.    Miss Prim

Edited to put more information.  It is probably worth between $50K and $60k.  It was rented for $720/ month to my nephew, who lived there for 4 years.  We could probably get $800- $850 rent.  The neighborhood is nice, but the whole city has gone downhill over the years.  Lots of rentals because the numbers are attractive to investors.  We paid $21,750 for it 30 years ago and it has been paid off and fully depreciated for years.

[Fallenour]

Ill honestly tell you that if you are looking to get 6-6.5% but not have to deal with it anymore, you should simply sell it, and put the money into a dividend fund.

If its mostly already depreciated, further depreciation wont really help you. Additionally, since you are already close to retirement age, it would be a great way to move the money into retirement accounts, and use the additional payments you can make toward said accounts to protect it from as much taxes as possible.


Another thing to think about is potentially adding it as part of your retirement account first, specifically by "buying" it from yourself to yourself, from your actual ownership into the ownership of your 401k.

By doing this, you avoid taxes, especially if its a ROTH IRA.

With many dividend markets ranging from 4-8.5%, the average comes out to be 6-6.25, which is your desired range.

Additionally, the chances of default on the land contract exist, with additional risks of noone wanting the land contract to begin with.

With dividends, they simply exist, and are immediately accessible.

Ultimately, its up to you though.

Ill go ahead and tell you though, anything that I run into that provides me with less than a 10% gain, I drop and put that money into stocks, bonds, and ETFs.