FLEXABLE LEASE OPTION
I have found many people cant afford the 1700/mo I require to lease option my house. I created the option to pay only 1450/month and create a negative interest account, lets say 50/month that adds to the principle, if they dont pay the full 1700. If they are paying 1700/month with 10,000 down how much is fair to give them towards downpayment?? 300/mo?? whats the industry standard?
Please we need help, I just Bang fell into this great business and since februrary I hit the ground running! This idea is do able The buyers will lose the minimum 3400 deposit and get no credits towards downpayment until they have a 5000 down account then give them 75/mo until they get the 200-300 credit only if they put up the 10000!! well what you out there think?
Option consideration and the associated terms are by agreement of the parties. Your agreement should have a lease with periodic payments (most of the time) and an option consideration that can be very flexible and whatever you agree on. You can get one lump sum up front or monthly payments. You can credit some or all of the option consideration to the down payment or purchase.
You should keep option consideration separate from lease payments since they are taxed differently. Option consideration does not need to be declared until the option is exercised or abandoned.
I am not sure what you mean by negative interest account. Interest on what? Is there a loan here? When you say "adds to the principal" do you mean adds to the purchase price? Also, what do you mean by:
"This idea is do able The buyers will lose the minimum 3400 deposit and get no credits towards downpayment until they have a 5000 down account then give them 75/mo until they get the 200-300 credit only if they put up the 10000!!"
Perhaps you can clarify.
Normally, rental credit won't be allowed to apply for a down payment unless above fair market rent for the area and usually only if paid with a separate check. Rental credit usually goes toward purchase price. Why not have them pay the extra $250, but give them double in credit IF they buy ($500) and if they are not late with the rent?
THE 50/MO CHARGE IS IF THEY DONT PAY THE FULL 1650, YES THE PRICE GOES UP
IF THEY DONT BUY THEY LOSE THE DOWN
when they pay 5000 down, 75 mo credit off purchase price is given if down is 8750 200/MO CREDIT GIVEN down 10k 300/.mo credit
IF they paid 3400 down zero credit given rent paid can be 1450 then they must buy at 50/mo higher later and if they dont buy they lose 3400