Re: common house financing
From: David Mandel (dlmandelrcip.com)
Date: Tue, 5 Oct 1999 00:36:27 -0600 (MDT)
I'd try very hard to avoid those alternatives. It seems there have been enough
cohousing developments by now that banks wouldn't be so reticent. Maybe there's
another reason? Is your LTV ratio on the high side? If so I would try first to
raise some other funds -- from yourselves, friends, relatives, your local
housing authority if you're willing to build in some long-term affordability
for lower-income buyers for some of the units -- before resorting to the other
schemes you mention. You seem to be well aware of their disadvantages.

Good Luck.

David Mandel, Sacramento

Cascadia Commons Cohousing wrote:

> Here's a post from the other Portland (OR) cohousing group:
>
> We're looking at fallback plans to our hoped for construction loan to build
> the whole project.  Has anyone considered or attempted to get your common
> house built by any of the following unorthodox routes?
>  a) a developer (separate from whomever is developing the dwellings)?
>  b) have the HOA apply for the construction loan (instead of the developing
> entity);
>  c) have the homebuyers collectively apply for a mortgage on it, instead of
> folding it into their individual home mortgages. (we recognize that this
> would be less advantageous re: income tax deductions)
>  d) have the common house owned by an investor, with deed restrictions
> presumably, from whom the HOA lease/purchases it. (we recognize that this
> would be less advantageous re: income tax deductions)
>
> We are having trouble getting a construction bank loan, and we had the
> thought to split off the common house.  This would lessen the amount of the
> construction loan our LLC is seeking, and would improve the ratios that the
> bank uses to screen loans.  The cost of building the common house is at
> least a third higher than the value added to our project's appraised value.
>
> The banks are balking for a variety of reasons (too many borrowers, condos,
> etc), but maybe if we could improve the ratios . . .   Also, the hope would
> be to assure the construction of the common house, so as to strengthen the
> project's marketability.
>
> Your experiences and advice to gates_jennifer [at] hotmail.com will be much
> appreciated!
>
> Jennifer Gates
> Cascadia Commons Cohousing
> Portalnd, Oregon

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