Lease Option

[Arturo Cooks]

Im just getting my feet wet with RE investing, Ive met a local investor with 12 properties he would like to sell. I went to a mortgage lender, and it turns out I do not have enough "established credit" The investor in willing to do a lease option for 6-12 months with a minimum of 5k down per property. My question would be, if I was to move forward with the lease option 6-12 months down the road when Im able to get financing...will I have to still put 3.5% down for the FHA? Do I lose my 5k spent for the lease option? Will the lease option help build my credit? What are the benefits of a lease option as opposed to waiting for financing?

I have two friends also interested in the lease option, they both have 5k as a down payment. Would it be smarter to partner and get a package deal, or keep everything separate?

[Gerald Harris]

Here is a post about lease options that Brandon Turner did back in 2013.   Excellent explanation about lease option/rent to own

http://www.biggerpockets.com/renewsblog/2013/01/06...

1. FHA is owner occupied. For investment property your down payment will be roughly 20% of the purchase price

2.  Get the lease option as long as possible.