Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
General Landlording & Rental Properties
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 7 years ago on . Most recent reply

User Stats

93
Posts
7
Votes
Asher Carr
  • West Orange, NJ
7
Votes |
93
Posts

HOW TO JUSTIFY NON-REFUNDABLE DEPOSITS?

Asher Carr
  • West Orange, NJ
Posted

Hey evet,

I'm at work and out of no where I had this thought. For a rent-to-own property, is a non-refundable deposit ok? Though the buyers are not obligated to buy the property at the end of the term, should the upfront deposit be refundable like a normal apartment rental or could it be different because it is a home and there's more responsibility and different mentality about the property. What are your thoughts? Thanks.

Most Popular Reply

User Stats

1,958
Posts
2,422
Votes
Wesley W.#1 General Landlording & Rental Properties Contributor
  • Rental Property Investor
  • The Vampire State
2,422
Votes |
1,958
Posts
Wesley W.#1 General Landlording & Rental Properties Contributor
  • Rental Property Investor
  • The Vampire State
Replied

The non-refundable payment is not unreasonable at all.  They are paying an option premium for the right (but not the obligation) to purchase that property from you for a set price within a given time period.  By accepting this premium, you are obligated to sell the property to the option payer under those conditions should they choose to exercise that option.

It's really no different than stock options.  In financial terms, you are "selling a call" to them.  Ask your broker if you get that money back if you decide not to exercise it in the future. ;)

Loading replies...