A family member is selling a piece of grazing land with improvements; RV parking areas, arena, bathrooms and such to another family member (united states). What is a reasonable interest rate, realizing that this is a family member that they don't want to take advantage of? They've proposed 3.5% which seems a little too low; all the risk is on the seller's side and I don't want him to get burned on a rate that is below a typical risk-free bond return. What would the buyer likely pay on the open market for that loan? I was thinking 6-7% but have no idea of financing agricultural land with improvements.
The purchase price is $1.6M so it isn't a trivial sum of money.