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.

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Local Information for Salt Lake City, UT

Latitude: 40.7547 -- Longitude: -111.892622

Other Area Cities: Millcreek Salt Lake City Riverton Bennion Bountiful Centerville Cottonwood Heights Holladay Kaysville Magna Midvale Murray North Salt Lake Sandy West Jordan South Salt Lake Taylorsville West Valley City Kearns South Jordan

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Salt Lake City has many informal neighborhoods. The eastern portion of the city has higher property values than its western counterpart. This is a result of the railroad being built in the western half as well as scenic views from inclined grounds in the eastern portion. Immigrants find housing more affordable on the west side, which results in demographic differences. Interstate 15 further solidified these divisions.The Utah Museum of Fine Arts, Utah Museum of Natural History, and the Museum of Church History and Art are some of the museums located in Salt Lake City. Other museums include the Utah State Historical Society, Daughters of Utah Pioneer Memorial Museum, Fort Douglas Military Museum, and the Social Hall Heritage Museum. Clark Planetarium at the Gateway Mall houses an IMAX theater.The Utah Arts Festival has been held annually since 1977 with an average attendance of 80,000. About 130 booths are available for visual artists and there are five performance venues for musicians. -- Source: Wikipedia.com

Utah 2000 Census Population Profile Map

	Salt Lake City	Utah	United States
Population	181,743	2,233,169	281,421,906
Median age	30	27.1	35.3
Median age for Male	29.5	26.7	34
Median age for Female	30.6	27.7	36.5
Households	71,461	701,281	105,480,101
Household population	177,170	2,192,689	273,643,273
Average household size	2.48	3.13	2.59
Families	39,830	535,294	71,787,347
Average family size	3.24	3.57	3.14
Housing units	77,054	768,594	115,904,641
Occupied units	71,461	701,281	105,480,101
Vacant units	5,593	67,313	10,424,540

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