Financing home improvement for homeowners - do you do it?


#1

How many of you front cash for homeowners to do major repairs such as replace a leaking roof, replace old single pane windows with new insulated double paned, etc? The conundrum of course is that our customers don’t have cash. But they do have their homes and jobs. My view currently is if I stand by and watch a home deteriorate simply because a homeowner can’t come up with several thousand dollars in cash to replace a 20-30 year old roof - I’m potentially letting the whole asset go. But if I front a few thousand, give them a year or two to pay it off - I’m protecting my own income stream on that lot. Same for energy efficiency upgrades. What are your thoughts?


#2

I once had a tenant approach me on the issue. We told them we would do it ( at what i felt was a reasonable rate) they didnt take the offer. Their work did some type of 0% interest alone instead. Im sure there are 100 reasons why not to and lending laws etc but it was a 14 year year tenant and i think it would be hard for any ( conventional) lender to help them on this. I have seen a lot of people do upgrades their self as well over time.

@Ivan_ilych I did find out the city ( actually at the county level) did offer a program for low income tenants for energy efficient upgrades. Some tenants did do that and it worked out for them. Might be something to check as well.


#3

I will loan money to my best/longest term residents as a separate income stream on the Community provided they have a solid income. For good tenants I generally charge 8%-10% interest on the loan.


#4

I always did it if the loan made sense. There are licensing and compliance issues however. Since we had a related finance company that was likely already holding the title for the purchase money loan, that was never a problem for us.