Re: Development Financial Structure
From: Sharon Villines (
Date: Tue, 19 Nov 2002 06:09:04 -0700 (MST)
On 11/19/02 1:51 AM, "Rob Sandelin" <floriferous [at]> wrote:

> Maybe some of the developer driven groups have accomplished this,
> but I can't imagine why a developer would do this myself. Cohousing seems
> like such a wacky thing from a conventional profit motive sort of thinking.
> And of course, a developers profit then has potential to add to the costs
> some, but if that's where your startup money comes from, you have few
> choices.

What our developer did was have all the pieces in place so the down payments
came right at the point where he went to the bank for the construction  loan
so our money was not held up for 5 years of "are we going to build or not?"
Because he had established relationships with architects, lawyers,
contractors, etc. he was much better able to fit all the pieces together in
a very short period of time. Although the project was not completed in the
amount of time we expected, there were multiple reasons why this happened
that were out of his control.

Developers save you money in the long run. Their standard fee is 10% of the
cost of the project but if you try to do this yourself, it will cost you
much more than that. Inexperienced first timers have no leverage with errant
contractors, no contacts in the permit offices, no continuing relationships
with lawyers, no trust built with a bank, no experience balancing a $7
million budget, and no ability to handle a project schedule that involves
multiple contractors, subcontractors, inspectors, shipment and storage of
building materials over a period of 2 years. This takes experience and years
of building relationships.

Even with an experienced developer there can be major problems. We are still
sorting out HVAC and plumbing systems two years after move-in.

We also had some members who were able to help others with down-payments,
essentially floating loans until we got to signing mortgages over a year
later. Some members were able to use a DC bond program that allowed them to
buy an apartment without a down payment, but the developer still had to show
the bank the contracts with 5% down before he could get the construction

The upfront money has to come from somewhere. You can't build with air. But
an experience developer has the contacts that allow him or her to get at
least some of the upfront work done in anticipation of payment from the
construction loan.

Sharon Villines
Takoma Village Cohousing, Washington DC

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