In this Q&A Thursday video, Chris Prefontaine addresses a common landlord‑investor question: how much down‑payment should be required from a tenant‑buyer in a rent‑to‑own deal. He warns that too small a deposit creates a “glorified tenant” who is likely to default, and argues that ethical, long‑term success comes from setting buyers up to win. Prefontaine recommends a starting down‑payment range of 7‑10% of the purchase price, adjusting lower for strong credit or higher for less certain buyers. He emphasizes using scheduled extra deposits tied to predictable cash events—tax refunds, retroactive raises, promotions—to build the down‑payment over time. The video outlines practical tools such as checklists and scripts that guide landlords through the qualification process and help maximize the initial deposit. He also shares performance data from his 3 Paydays Course Mastery System, noting that student deals typically range from $45,000 to $350,000 per house. Throughout, he positions his approach as morally superior to other educators who suggest minimal deposits, and promotes free resources and a paid course for deeper learning.
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You know what's really cool about these Q&A Thursdays, guys? These are real questions. Like, I literally had a conversation last week with someone looking at our community, and this was one of his legit questions. How much should I ask for a down payment from my tenant buyer in order to allow them to take over one of my properties? Whether you're controlling it or owning it, this is where a lot of people mess up. I know that because we did it big time. Because when you don't take enough deposit and qualify people properly, you have a glorified tenant. And if you have a glorified tenant, you have a potential big fat headache, period. Now, other educators out there, I don't need to bring names into this. Now, they're going to tell you, yeah, just put them in the house for any amount and then if they default, you do it again. Well, I get that that might sound good, And I get that that might be legal for them with their contracts, but it's not, in my opinion, good at all from a moral and ethical standpoint. Can you imagine knowing that you're going to set up buyers to fail? That's awful. Here's the range you want to be in if you want to set them up for success, typically in the 7 to 10% range. Not a rule. It's just kind of a starting point for discussion. Now, I've done a few videos that we've used for years and years. You can utilize to send your buyers there, and your buyers will see that whole process. Educate them through the whole process. And if you're in our family community, actually, it'll educate your buyer as to how this all works. All done for you. And if the buyer is strong, for example, great job history, stable income, you might stay on the lower end of the deposit. It's okay. Like you look at the whole thing holistically, provided you and they have a plan to. Work up the down payment over time. And that means what? Scheduled extra deposits with tax refund time and things like that. There were months during like March and April each year for years and years where we've had hundreds of thousands of dollars scheduled due to tax refunds coming in that people committed to a portion of it coming towards their house. For a lot of our buyers, fun time of the year for us, and it can be for you. Picture what that would look like for you every spring, by the way. Pretty cool. Now, if you're a little unsure of the person, you might push a little higher. Why? Because their deposit isn't just money. It brings with it commitment, qualification, protection for you. And the more someone puts down, frankly, the more they are to follow through, plain and simple. And the easier it is for them to get a loan later and a better loan, probably. So you're setting them up to win. See, This entire process is how can I let them succeed? How can I get them to the finish line? We have specific checklists and scripts to help you walk through with the buyer that's going to enable you to, A, get the most for their deposit. It walks them through logical steps that we've mastered over the years. Not sure where to get started? Go to smartrealestatecoach.com/getgoing for free books, strategy calls, and a whole bunch more. We're going to help you get going the wicked smart way. We've been after this for over a decade doing exactly that. B, position future deposits like during tax time, like I mentioned, retroactive raises, promotions coming up. Quick example, we had a state trooper who said, yeah, I have retroactive sergeant pay and I'm going to get $6,000 here and $6,000 here. So he committed to us like I think it was $4,000 each time. Just, just as an idea to get you thinking. So try not to think, what do I want to make here? Think instead, what gives this deal the highest chance of success? That's how you structure it, because the 3 paydays will take care of themselves and they'll typically range for you. At least this is historically for us, for all our students across the nation, between $45,000 and $350,000 per deal, per house. This is— that's something to not forget, guys. I'll see you next Thursday. You want to learn more about how to work with buyers? It's an entire module in our 3 Paydays Course Mastery System. Go to smartrealestatecoach.com/qls and use the coupon code Tube, T-U-B-E.
