Home Selling in Indianapolis>Question Details

Heather, Both Buyer and Seller in Indiana

i am doing a lease to own cantract w/an option deposit how much deposit should i ask for if monthly pymnt 1200

Asked by Heather, Indiana Thu Feb 19, 2009

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Ms. Cody,

While we appreciate your "gusto" to answer as many questions as you can in one 30 minute setting, please take note that dragging 14-18 month old questions out of the archives isn't exactly what the Trulia staff has in mind.

And as I look at the majority of your responses....all you are basically telling them to do is find their local Real Estate Agent, etc...etc.

If you would like to contribute, please try to make it more relative to the question and don't pull out old questions in the possible attempt to increase your Trulia "score" or "total contributions". It isn't flattering.

Darin
0 votes Thank Flag Link Mon Jun 7, 2010
Deat Heather,

It would be in your best interest to have a local Realtor help you with the creation of the contract. Lease to own contracts can be complicated. Having a good Real Estate Attorney as part of your team would be a good idea too!

Best of Luck!

Maureen
0 votes Thank Flag Link Mon Jun 7, 2010
Short answer.....as much deposit as you can get. Long answer,.....it all depends on the deal. I have done many lease/purchases and the thing I always focused on was what is the exit strategy? How was the renter going to finally become a buyer? If they had their act togather, and had a plan to put themselves in a good financial position where they could commit to a purchase. I would take less deposit. There were some that were on shakey ground and I required more of a deposit. I would think 3.5% -5% is pretty normal. Which is about what they would need if they were going to purchase a home. 10% is not unheard of. Since you are taking the risk of them tearing up the property and sticking you with a repair bill, you should take as much deposit up front as the deal allows. It's your security they will take care of the property. Everything is negotiable so if you are getting a great interest rate, you might consider lower deposits. Is your term long or short term. If your making good money, a long term might be favorable. If they want to buy out in, lets say less than a year, and they have a plan, you might want to offer favorable terms if your goal is to onload the home.
Use the mindset of a landlord and take steps to minimize youe losses should the renter decide to not exercise the option. Paint carpet, pet damage are the usual things I have had to repair after people have bailed on their option. You might want to consider 3 documents. 1. your lease. 2. an option contract that specifies that the deposit is not a deposit but is a non refundable option fee that is applied to the purchase when they exercise the option. If they walk, they forfiet that money. This usually seperates serious buyers from those who are just going to rent and bail. 3. A purchase agreement spelling out all terms of the purchase, who pays what and when, at the time they exercise their option to buy. I have a 50/50 success rate on options. Peoples lives change. Divorces, job losses/changes, money problems, etc. It is easy to walk from an optionj because they don't own it. My experience is they more they have as a deposit, they more they are invested in buying out at sometime. They will also treat it more as their own property and not just a rental. On a rent to own deal, you might want to specify who is responsible for maintenance, upkeep, repairs, etc., and in the event they can't pay for the repairs, how that is handled. Lets say the water heater or . furnace goes out, obvioulsly you would want to protect your investment and fix them if the renter did not have the money. Other considerations are insurance, utilities. You probably want to address those in your lease as well. A quick reminder is that sewar bills can be placed as a lien on the property if unpaid. You might want to consider paying those on your own. I learned a $1500 lesson that since they are unmetered, the utility can charge them to the home, thus you as the owner get stuck with them, even if you never knew they were unpaid. Hope this helps. -Eric
0 votes Thank Flag Link Fri Feb 20, 2009
What's the sales price, interest rate, and amortization period?
0 votes Thank Flag Link Thu Feb 19, 2009
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