Personal Loans to Cohousing Groups--REVISED
From: Joani Blank (joaniswansway.com)
Date: Sun, 29 Jan 2006 13:13:14 -0800 (PST)
I accidentally sent the draft of this email to the list moments ago. Please read this one instead.

Dear friends,

I'm writing today to suggest one more way to invest in/support the cohousing movement; that is by making personal loans to cohousing groups in development. As some of you well know, there comes a time during the development of many cohousing groups when total equity investments of the members total somewhat less than is usually needed to complete a land purchase or to satisfy a bank that the members' equity share is sufficient for the construction loan to be finalized. Unpredictable cost overruns can, or a groups decision to upgrade to significantly greener buildings can also require additional funding.

I have loaned money (amounts between $4000 and $30,000) to four groups in development over the last 10 years, and it has been a very gratifying experience. Three of the four loansI've made have been structured as follows.

Interest is accrued from the date the loan originates at between 10% and 12% (but you and the group can negotiate what they can afford and the best you can offer). In one case the interest rate is reduced when the construction plans are approved (because my risk will be reduced then), and when the construction loan is let, the interest will be changed to the interest rate of the construction loan. The principal plus interest is due and payable in a lump sum X days after the last unit is sold. or by a date certain that might be before the last unit is sold.

The fourth loan I made was to assist a retrofit cohousing group in their process of becoming a condominium.

In all cases these loans have been formally unsecured, but in each case, I have ascertained that the group has an asset such as a paid-for site, or that they could without difficulty raise the money to pay me back in the event that the project collapses.

I have also made loans to four individuals living in cohousing that have made it possible for them to purchase a unit in a community where they'd been renting by supplementing the funds they had available to them for a down payment. (two of these loans were formal second mortgages the other two were not.

If any potential individual lender, or group wishing to solicit a loan from a friend of the community or a potential lender would like to contact me off-list for more details, I would welcome that. I'd even go so consider doing some informal "matching" of groups in need of funds with potential lenders.

Joani
Swan's Market Cohousing
Oakland, CA

Joani Blank
510-834-7399
Cell: 510-387-1315
joani [at] swansway.com
www.joaniblank.com


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