Should I loan my sister 32K at 4% interest for a loan period of ten years?

There is a strong likelihood you will never see your money again. Not the principal, nor the interest.

Never, ever, lend money to friends or relatives. You will be destroying the relationship when ( not if ) they cannot or refuse to repay you.Make it a gift instead.

Lending money to family never turns out well.

If she can't get money from a bank to finance her properties,

there is clear and present danger.

Did you know some credit unions are offering as high 2.76% returns on 7 year cd's?

A lot safer than leding to family.

I know this means locking up your money long term, but you can break a cd and only pay a few months interest penalty.

Brokerage accounts such as Schwab and Fidelity are offering even higher returns on cds. But with these you must hold for full term if you think interest rates will go up. They are brokered and you could take a hit on principal if you have to sell early.

What does she need the money for? Is she buying another apartment building? If so, I'd "invest" the money in the apartment building, and get a percentage return on the profit.

For example, if the building it $100,000 and you invest 32,000 then you would own 32% of that building. At the end of every year (or quarter, or month), she would give you a check for 32% of the profits.

Hybridize the terms: 4% for the first 3 years and then adjust the interest rate in years 4 to 10 for market forces

no. the div yield of AT&T stock is almost 6% right now. go buy some and tell your sister to take a hike.

I would get a good lawyer to draw papers, like put a lien on her buildings.