RE: Your bank loan
From: David Mandel (
Date: Sun, 1 Sep 1996 17:08:21 -0500
>Rob Sandelin writes:
>> The next time somebody asks me why is cohousing so expensive I am going
>> to just forward them your mail. thanks for the details. Sheesh, I am
>> not sure I could come up $25K cash, sort of puts a limit on who can
>> play I guess.
> and Tom Lent replied:

>Not all in our group have come up with the cash immediately. Many did
>long payment plans to get it together during our long development
>process. Lots of pain by a bunch of folks stretching to afford this
>stuff (cashing IRAs, leaning on friends and family for under the
>table loans, etc) - definitely deeply exacerbated by our inability
>to provide low down payment financing. And now as we get close to the
>permanent financing end of things, the time for payment plans is
>ending and the remaining new members will have to be able to come up
>with the cash pretty quickly.
>Tom Lent
>Berkeley Cohousing

Any of us who wanted got mortgages with 5% down, and some of our low-income
buyers paid only 3% down. I'm also under the impression that the
availability of such mortgages is more widespread now than when we did ours
in early 1994. There are lots of such programs especially for first-time
buyers. In our case, being in a redevelopment target area made some
programs available for non-first-time buyers as well. Check with your local
housing agencies; they should know all about such things.

As for the amount of total cash we needed to leverage the construction
loan, I believe we had in the neighborhood of $350,000, a little more than
10 percent of the total development cost, at the time we secured our main
$1.9 million construction loan. Eventually we raised closer to $500,000,
but a lot of that was last minute, from the last few buyers to join and as
people had to pay up front for some options. Our construction loan was also
obtained at the depths of the construction slowdown here, late 1992, and we
were fortunate enough to be able to supplement it with additional
construction loans from the housing agency and one outside community loan

The cash we raised, by the way, came mostly from ourselves, but some
low-income members put in very little while others put in much more than
the 10% of home price target we set. And a few outside friends and
relatives tossed in the rest. That worked out fine for the most part, with
investments credited toward down payments and surplus amounts repaid at the
end, with interest, though final screwups of various sorts meant that
buyers did not get the full amount of scheduled interest on their
investments up to the target amounts.

In sum, there are lots of creative ways to organize the financing of a
project among group members. Do what fits your needs best. And by all means
explore community and state programs that can help. There are a lot out
there. The things that will make you most eligible are low-income buyers
(especially if you are willing to undertake restrictions that ensure a
measure of long-term affordability), building in a poor neighborhood for
which redevelopment funds are available, and being first-time buyers.

David Mandel, Southside Park, Sacramento

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