Lot development, coho financing
From: Sherri Rosenthal (enocommonscompuserve.com)
Date: Wed, 2 Dec 1998 07:59:13 -0600
Rob commented that it can be hard to finance cohousing. I pitched Eno
Commons to three banks, and had two offers to provide the construction
financing. While I'm sure there are some areas where "cohousing" is
difficult to finance, I find myself wondering if some of the problem isn't
also due to the mistakes of inexperience in not structuring a project in
more easily financed ways. I think there are things that can be done to
make our projects stronger, and also make them more easily bankable. It
helps to have someone on your development or consultant team that knows how
to do this kind of structuring and how to talk to bankers.

On another topic: The "lot development model" is sometimes spoken of as if
there is one animal by that name. There are actually a number of variations
on the theme. The main drawbacks of a "pure" lot development model--by
which I mean that lots are sold individually, and each household then
chooses its own home design and builder, include:
        * Mish mash of building styles
        * No shared goals or priorities for the homes
        * Potentially long build out time before the neighborhood is       
"complete"
        * Expensive end costs for each household, since each home is       
probably one of a kind
        
There are, however, ways of compensating for these downsides, and of having
a modified lot development structure. The big benefits of the lot
development model is that each household obtains its own financing to build
its own home, which greatly reduces the risk for the development entity,
and also tends to cut down on overall development interest costs.

Best,
Sherri Zann Rosenthal
Eno Commons Cohousing
Which became sold out about two months ago, and where eight of our 22
households now live on site.

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