So far all of the answers provide good insight to your questions. Should you sell to your tenant, be sure to handle is as a sale. If it means hiring a 3rd party to help you, then so be it. Get an assessment of the market value on your home & make sure the buyer is quailfied through a bank or loan officer.
Gail Mercedes Cole
Reators CAN handle lease options. These are transactions between a seller and prospective buyer that allows the prospective buyer to rent the home for a specific period of time and monthly rent, with the right to purchase it for a specific price at any time in the length of the agreement. This differs from your situation, in that a large deposit, called "option money" is paid up front in exchange for the option to purchase down the road. It's a sort of "holding fee". When a Realtor undertakes one of these transactions for the parties, there are three negotiations that occur and three contracts that are made: The lease, the option, and the purchase agreement. All are made up front, and the option money, along with the security deposit and first month's rent, are collected by the seller. The option is the buyer's: they elect whether to buy at the end of the option period. In exchange, the seller keeps the option money, and if the buyer exercises the option, some, all, or none of it may be credited to the down payment, depending on what was negotiated.
As you can see, it's complex. If you want a lease option, it can be handled by an experienced agent. A lease purchase (rent to own) should be handle by an attorney or paralegal to draft the agreement.
As to dollar amounts, it's all negotiable, so whatever you can agree on that is fair to both parties and makes the risk wort it.
Blogging at: http://TheBremnerGroup.com/blog
I'm not a lawyer, so this isn't legal advice. However, you really want to have the excess considered an option fee so that you can retain it if the tenant-buyer doesn't purchase. Also, calling it a down payment suggests a sale is occurring--which it may not. Thus, if the tenant ends up not paying rent, you might be forced into foreclosing, rather than evicting. You don't want to do that.
But to address your specific question: Whatever you want. Frequently/typically, it's several hundred dollars (depending on the amount of the fair market rent). And, looked at another way, often about 25% of the option fee is credited toward the purchase price. But it's really all negotiable.
Example: Fair market rent is $1,000. You might charge $1,200 a month, with $300 per month credited toward the purchase price. Example: Fair market rent is $1,600. You might charge $1,850, with $400 a month credited toward the purchase price.
Again, really, all that is negotiable. You might decide to charge only fair market rent. Or you might charge more, but give a really hefty credit.
Hope that helps.
Keller Williams Realty
#1 Listing & Selling Agent KW Westside Realty
To the point, that would be dependent on what type of financing the renter/buyer can qualify for with a financial institution. You set your selling price and the buyer does their due diligence to get the appropriate financing in order to obtain ownership. Please let me know If I can be of any additional assistance.
Daniel R. Howard
Russell Real Estate Development Co