Re: Financing site purchase and construction
From: Lynn Nadeau (
Date: Wed, 20 May 1998 10:45:20 -0500
You ask how money was found for site purchase and how people's early 
financial contributions were valued, relative to later comtributions.

One has to find a balance between nickel-and-diming and acknowledging the 
very real risk of early financial investors, as well as the value of the 
thousands of hours early group participants put in.

At RoseWind Cohousing, we relied a lot on trust: doubtless there are more 
business-like ways of doing things that would afford more security. So 
this isn't a recommendation, per se, but an account of  how one group 
handled it. Successfully, in this case. 

We were fortunate in finding a piece of land that the seller wanted to 
sell gradually, so as not to incur big tax consequences for himself. We 
made a purchase agreement by which, of the 9 or so acres, we would 
periodically (every 6 months?) initiate purchase of another acre, with a 
down payment of $5000, then make monthly, or quarterly, payments, at low 
interest, on whatever we had thus initiated to date. At the same time, we 
paid the (low) taxes on the whole parcel. 

Early members put in $10,000 each, but when that ran out, or ran short, 
we raised needed money just by individuals' being able to pony up more 
(we need $500 more, who can put it in?). We kept track of how much each 
had contributed.  On a couple of occasions, we were loaned money by 
members, at interest. We had no bank loans. 

When our Planned Unit Development process had succeeded with the City, 
and our land was thus replatted into our site plan (rather than the 57 
little rectangles it had been in), RoseWind lots became a legal reality 
and we could buy title to our lots. At this time, members had credit 
against their purchase for the money they already had in. No interest was 

To acknowledge the thousands of hours the early members put in --- about 
5 people did all of the major work in crafting the PUD documents, 
designing the site, creating the legal documents, etc---when we figured 
the buy-in prices, once lots were legally available, we included a 
"pioneer discount" -- I believe it was something like a thousand dollars 
for every year a family had participated. 

One error we made was in figuring the "non-profit" angle too close. We 
figured what we thought the project would cost, total (land, 
infrastructure, etc -- though not houses, as we are a  lot-development 
model) and divided it up to come to the price tags for the real estate 
(home sites) we would sell. Theoretically, we would thus come out "even". 
What we didn't calculate was that this process was going to stretch out 
over years, during which the costs of building a common house, for 
example, would rise faster than the real estate prices could. Now we are 
down to our last few lots, and wish we could lower their price, but to do 
so leaves us short in our common house budget.  My advice for anyone 
going this self-development, lot-development, route would be to figure 
you will sell "almost all" of your lots, but not tie yourself to needing 
the money from that last lot -- for whatever reason, that last lot will 
be the hardest to sell, and what if it doesn't? Give yourself a little 
cushion, when figuring the "non-profit" break-even point. Nonprofits are 
allowed to have "reasonable reserves" so you presumably won't get in 
trouble if you end up with a little extra, which will doubtless not be 
extra by then. 

Lynn at RoseWind Cohousing, Port Townsend Washington
Where we still have a few lots for sale; 20 member families; 12 homes 

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