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 12/04/09 the Abril Baloney RePage is ranked at 4,769 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 New Orleans, LA

Latitude: 29.972754 -- Longitude: -90.059011

Other Area Cities: New Orleans Gretna Harahan Harvey Kenner Metairie Belle Chasse Meraux Terrytown Westwego River Ridge

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

To see random photos for other cities Click Here.

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

The Central Business District of New Orleans is located immediately north and west of the Mississippi River, and was historically called the "American Quarter." Most streets in this area fan out from a central point in the city. Major streets of the area include Canal Street and Poydras Street. In the local parlance "downtown" means downriver from Canal Street, while "uptown" means upriver from Canal Street. Downtown neighborhoods include the French Quarter, Treme, the 7th Ward, Faubourg Marigny, Bywater (the Upper Ninth Ward), and the Lower 9th Ward. Uptown neighborhoods include the Garden District, the Irish Channel, the University District, Carrollton, Gert Town, Fontainebleau, and Broadmoor. Other major districts within the city include Bayou St. John, Mid City, Gentilly, Lakeview, Lakefront, New Orleans East, and Algiers. Parishes located adjacent to the city of New Orleans include St. -- Source: Wikipedia.com

Louisiana 2000 Census Population Profile Map

	New Orleans	Louisiana	United States
Population	484,674	4,468,976	281,421,906
Median age	33.1	34	35.3
Median age for Male	31.5	32.6	34
Median age for Female	34.6	35.3	36.5
Households	188,251	1,656,053	105,480,101
Household population	467,033	4,333,011	273,643,273
Average household size	2.48	2.62	2.59
Families	112,977	1,156,438	71,787,347
Average family size	3.23	3.16	3.14
Housing units	215,091	1,847,181	115,904,641
Occupied units	188,251	1,656,053	105,480,101
Vacant units	26,840	191,128	10,424,540

Visit US Census