How Do You Handle Down Payment Credit On Lease Option?
I am brand new to Lease Option investing and would appreciate advice on how down payment credits are handled. I understand that you can collect additional money over and above the rent amount you charge your tenant/buyer each month. Also understand that you need to deposit seperately to show the lender that money was actually collected towards down payment, however do you as the investor get to keep that additional money or does it need to be kept aside and brought to closing on the tenant/buyers behalf?
Thanks for your advice in advance,
Brian
Hi Brian:
My advice is to never tell the future tenant/buyer that the option consideration will be applied towards the down payment of a home. Tell them it will be applied to the purchase price.
Who knows if he goes to the bank and the bank tells him that credit will not go towards the down payment and he comes back and sues you. Avoid those clostly problems. Just tell them it will go towards the purchase price wether it goes to the downpayment or not.
Diana