Rent to Own / Owner financing

November 20, 2008

Just recently I talked to a home repairman. He was telling me how he’d worked for a builder for over 10 years and how he had an “agreement” to purchase a home from his boss. They’d agreed on a price ($23,000) and on an amount that would come out of his paycheck every month. But that was it. Nothing in writing, no mention of interest. The home was in bad repair and the employee spent long hours and money renovating the home. The builder refused to do any repairs as he told the employee that as a home “owner”, it was the employee’s responsibility. Fast forward 10 years. The employee had come into some money and wanted to pay off the home and get a deed. He had enough money to pay off the principle and enough left over to pay interest of 8%. The builder refused the payoff, stating that as the home was worth more now, he wanted an additional $20,000 but that if the employee wanted, he could continue paying monthly. Needless to say, that employee is no longer working for the builder and no longer living in the house he’d called home for over 10 years.

Many people with poor credit feel that a “rent to own” option will help them find a home. They think that it is similar to going to some of the “no credit check” rent-to-own furniture stores that are in every town. “I’ll pay $1000 a month and then one day I’ll own the home”. Yes, it is possible to structure a “rent to own” contract, but it is extremely important to lay out all contingencies. How much of the base rent will go towards principle? Who is responsible for repairs? Is there a default clause if the buyer leaves the home before the house is paid off? Will the buyer forfeit the equity or will he get some of it back? In the case of delinquent rent, will the equity be applied to delinquent rent and the purchase/rent to own contract be voided? Remember, in a rent to own situation, the tenant/purchaser does not have title to the property.

Owner financing is different. In this case, deed is passed to the buyer at closing and a mortgage is held by the seller. The buyer will sign a mortgage note and mortgage the home. The terms of the note will have been negotiated before closing. In this case, the seller is not responsible for any repairs to the home and must proceed through legal channels to foreclose on the property should the buyer default on the mortgage note. Most sellers are reluctant to owner finance to someone with poor credit, but if there extenuating circumstances, this might be an option for those buyers who are not eligible for traditional financing.

As of 12/09/09 the Kelly A Hoolihan RePage is ranked at 5,450 with 60 points.
The monthly top RePage owner will receive a cash prize. Help this agent by bookmarking this site and posting it to blogs and other Web pages and encourage others to visit.

Local Information for Minneapolis, MN

Latitude: 44.964465 -- Longitude: -93.268198

Other Area Cities: Minneapolis Richfield Fridley Robbinsdale Saint Anthony Brooklyn Center Arden Hills Brooklyn Park Coon Rapids Edina Golden Valley Blaine Maplewood Plymouth Saint Paul Wayzata New Brighton Saint Louis Park Spring Lake Park New Hope

Enter our Photo Sweepstakes and Win $200 for your Minneapolis photos!

Click on Photos to Enlarge. To see all Minneapolis area photos Click Here.

Submit your photos of Minneapolis and become eligible to win $200. Click Here for details.

Minneapolis (pronounced [?m?ni'æp?l?s]) is the largest city in Minnesota, United States, and the county seat of Hennepin County. It adjoins Saint Paul, the state's capital and second-largest city. Together they form the core of the Twin Cities metropolitan area, the 16th-largest agglomeration in the country (and roughly 65th-largest in the world), with about 3,500,000 residents. In the 2000 census, the city itself had a total population of 382,618, making it the 47th-largest city in the United States. However, in the Census' 2004 estimates, that number had decreased to 373,943, putting it in 49th place, between Honolulu and Colorado Springs. If the two core cities themselves were combined together in the census, the resulting "city" would rank 18th, just between Memphis, Tennessee and Baltimore, Maryland. -- Source: Wikipedia.com

Minnesota 2000 Census Population Profile Map

	Minneapolis	Minnesota	United States
Population	382,618	4,919,479	281,421,906
Median age	31.2	35.4	35.3
Median age for Male	30.8	34.4	34
Median age for Female	31.7	36.3	36.5
Households	162,352	1,895,127	105,480,101
Household population	364,554	4,783,596	273,643,273
Average household size	2.25	2.52	2.59
Families	73,939	1,255,141	71,787,347
Average family size	3.15	3.09	3.14
Housing units	168,606	2,065,946	115,904,641
Occupied units	162,352	1,895,127	105,480,101
Vacant units	6,254	170,819	10,424,540

Visit US Census