The down payment should be as large as possible. A larger down payment means the Purchaser has more equity and owes less, both of which make the note transaction more secure and thus more saleable. Politely ask where the money for the down payment is coming from. If the funds are not out of his pocket, but from his parent’s or perhaps borrowed, you now have to make a decision as to your comfort zone and then make a decision accordingly.
Avoid “nothing down”. This may be a great way to buy property but a terrible way to sell property. Also, making small down payments over time – $1,000 today, $1,000 in three months, etc. – is just another version of “nothing down”.
Ask yourself: “Do I really want to sell to someone who is unwilling or unable to financially commit himself to the property?”