What's the typical down payment requirement for a lease option?

3 Replies

A friend asked this of me a few days ago and since I don't do LO's I didn't have an answer. Is there a percentage involved?

Thanks in advance.

In my opinion, no, there is no % that is required. Each side needs to assess their own position but I would suggest an option price not exceed 10% up front. I believe fairness in structuring these deals is very important so as not to be preditory by the seller.

Options can be valued, but usually it's way too much brain damage for most investors to foolwith and on smaller properties 10% is the norm that will not create problems. The option price can be signed as a note and payments made to it. Check your compliance issues for such arrangements. Good luck

Well a good investor will analyze each buyer/tenant and property and structure the deal according to the situation. Some buyers need help on the down payment side, where others may need to just rebuild their credit. I've seen options go from anywhere $500-$15,000 or (1%-10%) Also another key factor will be type of property, value etc.

Hope this helps

We usually look to get about 3% or a hair above.
Most of our buyers go FHA , so this way they have almost the FHA requirements for the down.
If a buyer doesn't have the down payment, then I can't help them.
Also, don't go too low on the down, as the buyer will never finance.
I'd recommend 3-5%

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