Cohousing-L Mailing List: Re: Financing

[Buzz Burrell (buzz]

A number of good points have been made regarding raising the money for 
Site Aquisition, Purchase and maybe Development.  Establishing the terms 
of the financing at the time the money is put in is certainly a key 
attribute, no matter what method one uses.

Probably the easiest method is to raise money by the Members making loans 
to the group.  

Advantages:
1. The terms of the financing will be in a Promissary Note, which is 
quite clear and non-debatable.
2. Unlike partially pre-paying for one's house, the Capital Accounts are 
easier to equalize when one has made a loan to the company.
3. As the project moves from high risk to lower risk, the interest paid 
on each loan can be reduced.
4. If there is difficulty raising money early on, setting a high interest 
rate will loosen some pockets.
5. People with more money can fund more of the community in a fair and 
balanced way.
6. If an early Member leaves, they will still be paid back their 
investment, which is also fair.  (Note - Membership Fees are different 
than loans, and are usually not refundable).

Also note that if the project fails, the loans will not be paid back.  
For that reason and more, it is important to have formed a legal entity 
befor doing any of the above. 



Buzz Burrell  * * *  Geneva Community 
176 acres on the Little Thompson River
   
4439 Driftwood Pl
Boulder, CO  80301
303.581.9875