Option money

General Real Estate Investing
1

In a SLO, what do you normally ask for in option consideration from the TB? 1%, 2%, 5%?

tomas

2

Howdy Tomas:

I did about 30 SLO in the $40K to $50K range and always got at least $3K down and even $5K on one deal. He actually pulled out 100 dollar bills the first day we met at the house and started counting out to $5K. I took the money and gave him a receipt and closed on buying the house a week later. He was serious and is still there after 6 years. The more cash you get the better they will care for the house.

3

Thanks Ted. I have a home for $219k and a home for $130k. I have been asking 2-5k. After week 3, I have found no TB’s. I have found several lookers but they don’t have the Option?

tomas

4

Tomas -

We run into the same thing. We decided it would be worth the risk to take half of the 3% plus the first month’s rent right away then spread the remain option payment across the next couple of months. So far this has worked fairly well. Just make sure to set a date that the option payment will need to be paid in full (we typically give them 3 months).

5

Thanks for the feedback. That does sound very doable.

tomas