let's keep it simple. Depending on the price of the house and where your located, find out what people are paying. I once had a seller try to sell me a L/O on a 90K house. He was asking for 20K down. With any house, how many people can afford 20K if your looking at 90K houses. Ask for what the market will allow you to ask. Remember that people are leasing the house and probably won't be willing to put a lot down if they never plan on owning the home.
You can always try this:
Advertise you have a house for L/O and when you get a call. Let them tell you what can put down. If you name the down, you probably could have gotten more and not even known it.
"Yes I have a have that you can L/O. the price is $xxxx....Tell me, how much were you looking to put down to move." If they try to get you to name a down, tell them your policy is you try to work around the buyer because you like to be flexible. Try to maintain control and have them tell you what they want to give you. If it's low...."Well, I was looking for $XXX, but I'll take your $xxx and let you move in, but tell me, how are you going to make up the rest."
Thank you for the info.
I thought that when you do a L/O some money the potential buyer is paying is contributed towards his purchase. Will that be some portion of the money the buyer will be putting down or portion of his monthly payment or how does it work?
It's really up to you. (This is coming from how I was taught) You make the terms. do you want a portion going to the price? I've seen where an investor got a 60K down from their buyer on a L/O and the buyer never exercised the option. they kept the 60k and if the buyer moves out, they can do it all over again. Set your terms and stick with them. you can always buy a L/O program to teach you all your options.
I would second everything that you've been told so far, and if you need a rule of thumb, 3-5% of the price usually works.
If you want to increase your monthly profit, offer the rent credit toward purchase price, i.e. 1200 with no credit, 1400 with 150 credit toward purchase.
Make sense?
As stated before, their your terms. The tenant has the option of trying to find other terms somewhere else, or accepting what you have to offer.
By way of example here is a recent one that I did:
FMV: 360K
1 year L/O
Purchase price : 375K
Option Consideration: $7000
(non refundable, applied to purchase)
Lease Payment: $2500
Rent Credit: $500 if on time payments
(non refundable, applied to purchase)
Option and Lease can be renewed for an additional year for another $7000,increase of $100 in lease payment and increase in purchase price of 5%.
Are you buying or selling on a L/O?
I'll be selling one
let's keep it simple. Depending on the price of the house and where your located, find out what people are paying. I once had a seller try to sell me a L/O on a 90K house. He was asking for 20K down. With any house, how many people can afford 20K if your looking at 90K houses. Ask for what the market will allow you to ask. Remember that people are leasing the house and probably won't be willing to put a lot down if they never plan on owning the home.
You can always try this:
Advertise you have a house for L/O and when you get a call. Let them tell you what can put down. If you name the down, you probably could have gotten more and not even known it.
"Yes I have a have that you can L/O. the price is $xxxx....Tell me, how much were you looking to put down to move." If they try to get you to name a down, tell them your policy is you try to work around the buyer because you like to be flexible. Try to maintain control and have them tell you what they want to give you. If it's low...."Well, I was looking for $XXX, but I'll take your $xxx and let you move in, but tell me, how are you going to make up the rest."
Hope this helps.
Thank you for the info.
I thought that when you do a L/O some money the potential buyer is paying is contributed towards his purchase. Will that be some portion of the money the buyer will be putting down or portion of his monthly payment or how does it work?
It's really up to you. (This is coming from how I was taught) You make the terms. do you want a portion going to the price? I've seen where an investor got a 60K down from their buyer on a L/O and the buyer never exercised the option. they kept the 60k and if the buyer moves out, they can do it all over again. Set your terms and stick with them. you can always buy a L/O program to teach you all your options.
I would second everything that you've been told so far, and if you need a rule of thumb, 3-5% of the price usually works.
If you want to increase your monthly profit, offer the rent credit toward purchase price, i.e. 1200 with no credit, 1400 with 150 credit toward purchase.
Make sense?
As stated before, their your terms. The tenant has the option of trying to find other terms somewhere else, or accepting what you have to offer.
Good luck
By way of example here is a recent one that I did:
FMV: 360K
1 year L/O
Purchase price : 375K
Option Consideration: $7000
(non refundable, applied to purchase)
Lease Payment: $2500
Rent Credit: $500 if on time payments
(non refundable, applied to purchase)
Option and Lease can be renewed for an additional year for another $7000,increase of $100 in lease payment and increase in purchase price of 5%.
TB covers all maintenance of the home.