L/O fee - 3% (or so) + first monthly payment? - Posted by KatieFL

Posted by gwtx on July 10, 2001 at 18:46:58:

As little as 3 payments moves you in. Charming,3/1/1. Call KatieFL 555-555-5555.

When the phone starts ringing off the wall,(as it will),tell them the 3 payments are 1st month, last month, and 1 month security. Then ask them how much they have saved up toward owning their own home. Some people will try to be coy, some will say $1000, or $2000, or $3000. (Some will even ask if this includes this weeks paycheck that they’re getting. What fun!)

They will naturally ask where the property is located. But now you can just tell them that property that was advertised is already gone. You then tell them that another property might be available within a few days. This helps you to develop a tenant/buyers list. After you have 5,10,15 people to choose from, call the ones that have the most money to put down on the option consideration.

For L/O properties you shuld be able to get around 3-5% which includes the 1st,last, and security.

Hope this helps

L/O fee - 3% (or so) + first monthly payment? - Posted by KatieFL

Posted by KatieFL on July 10, 2001 at 12:26:47:

Just a simple question. Most people say that they try to get at least 3% option fee money. Does the first month payment get added to that?

The reason I am asking is that I have a l/o of FMV $65,000. I am having hard time finding people with money. And then, when I put ads saying “$2,000 down, $650 month”, they assume that they do not have to pay the $650 at the start of the lease, only starting with the second month. Is that just me or am I mistaken here? What is the common procedure?



Target those wives as Lori posted… - Posted by Carey_PA

Posted by Carey_PA on July 10, 2001 at 22:24:27:

make the bathroom and kitchen look pretty :slight_smile:

Re: L/O fee - 3% (or so) + first monthly payment? - Posted by Dave Mckee

Posted by Dave Mckee on July 10, 2001 at 19:00:52:

Here’s another way of doing the same thing.

Advertize “Rental purchase” w/first and last months rent, normal deposit and move in. Then, structure the rent to build the 3% option fee over the option period.For instance on a two year option period. ( $1800/24 months= $75.00) then add your standard rent of $650+ $75=$725/mo.rent x 2=$1500( first and last month) + deposit= total move-in cost. If they buy it, give them credit for the extra $75.00 toward the down payment. You can taylor this to suit, but they get in for standard lease terms, just higher than standard rent, and you have a better cash flow while you waite.


Re: It’s the market you are in - Posted by Lori Samson

Posted by Lori Samson on July 10, 2001 at 12:47:10:

The market you are in is the problem. When you are trying to get into a market of people that pay only $500-750 a month, they have little to no money. The 2-3k they put down is everything to them. You may want to see if you can afford to defer some of the down payment for them. How long have you been actually been marketing this one? If it’s only been a few weeks you may want to go a little longer but hang on to any other aplications that you did get in that only had the down payment and not the rent. Is this property sandwich lease optioned or do you own it? I’m trying to see if you have to make the payments each month now or can you just be a little more patient?

Do you have any money to put into the house? If you have a property that’s not moving well I like to put out a few large flower pots by the front door and I will paint the front door (if I can)a dark semi-gloss green (Sea Tempest Green from Home DePot) and put a brass kick plate on. I will add a wall paper border to the kitchen and bathrooms. Add a nice shower curtain and watch how much harder they will try to ‘GET THAT HOUSE’! The wife will be sitting in the car pulling away begging her husband for the house. Appeal to the wife, she’s the one who will likely be spending the most time there and cleaning it. Make her like it and you have a strong sale!


Is security deposit common in l/o? - Posted by KatieFL

Posted by KatieFL on July 11, 2001 at 09:13:05:

I usually just heard option fee + rent. Is it better to get a refundable security deposit too?

Thank you.


Re: It’s the market you are in - Posted by KatieFL

Posted by KatieFL on July 10, 2001 at 14:05:51:

Thank you for the suggestions. This was actually a rehab property, so it’s totally remodeled. I have tried to sell it since last September and it was under contracts the whole time. Each time the FHA financing would fall through. I have made payments on the empty property for too long, so I am trying to lease option it out to get some monthly payments coming in fast. I am also leaving out of the country in two weeks and I really need to get it occupied by then.

I would like to get the whole option consideration, but it’s not as important to me as steady monthly payments. I am just afraid to let anyone in for little money, in case they leave damages. The place is spotless right now.

Are you saying that higher rent market is actually easier to find? I thought, higher rent would eliminate a lot of potential TBers, since most people can afford this range?

Anyway, what would be the least I should accept for a option consideration?

Thank you.


Re: It’s the market you are in - Posted by phil fernandez

Posted by phil fernandez on July 10, 2001 at 13:24:59:

Hi Lori,

Excellent advice. A lot of times we forget that it is often the little things that make the diffence. As Lori says, paint the front door,place a couple of flower pots and something as simple as a new fresh bathtub curtain can make the difference in a sale.

These are all nice easy ways to " tune up " the property.

Re: Is security deposit common in l/o? - Posted by Dave Mckee

Posted by Dave Mckee on July 11, 2001 at 10:44:32:


Yes. Until they exersize their option, they are a tenant and should have a security deposit just like any other tenant. Don’t assume they will never break anything or leave the place clean, particularly if they are angry at not being able to perform on the option, even if it’s not your fault.
Good luck!


Re: The average market is best - Posted by Lori Samson

Posted by Lori Samson on July 10, 2001 at 22:07:44:

Don’t go into the high end market but don’t stay in the lower end of the market either. In my area the average home is 85-140k and the lower end of that is where the really small 3-2-1 type homes are. The rents are in the lower range and that’s the kind of market I stay out of. I also don’t like the higher end (about 1600 and above for rent). The average 3-2-2 home in a nice area starts (Dallas area) rent at about $895-1200 a month. People who can afford to pay nearly 1000 for rent a month can usually put down 3-4k without too much problem. When you go lower then that you get the family that’s bearly making ends meet. Change the numbers to reflect your area market. If 700 is the lower end of the market rents then I would look at a little higher. You’ll sell faster too.