Re: rental policy in these economic times
From: Kristin Wells (cbuilderddgmail.com)
Date: Wed, 2 Feb 2011 07:59:54 -0800 (PST)
Sure. I just sent this to someone who emailed me offline too. It's pretty
common in condos and such (especially now) and we are following some
standards, but are more lenient/giving in some respects - so we're told.

To move in, someone puts down an option fee. This is typically
non-refundable and varies in amount. However, it is put in a restricted
account for the purpose of their future down-payment and will be made
available to the purchaser upon closing. We are doing 2.5% (which for a 300K
average unit cost is $7500).

Then each month the person makes payments (similar to rent or mortgage). A
percentage of each payment is also put into this restricted account. So they
are building up equity for their down payment. We are doing 4% of purchase
price divided among the 12 months as the monthly payment. 25% of that is
reserved for the purchaser. The rest is used by the developer to help offset
holding costs (or in other cases, could be the home-owner for mortgage,
repairs, etc. - also holding costs). For us, the lessee is also responsible
for the HOA dues, utilities and property taxes while living here. We are
told that 25% is high, but we really want people to buy, so having a good
nest-egg was important to us. These funds are also held in a restricted
account (likely the same as the option fee)

Our term is one year with possibility for an extension. This too can vary.
They can execute the purchase anytime within that time-frame.

The total monthly costs when everything is accounted for is a bit higher
than average rent around here, but less than most who would have a mortgage
with 20% down. And, they are putting money away for their down payment. If
they walk away/don't close, then the owner gets the option fee and the
monthly deposits. So its a pretty strong incentive to buy in. And it helps
bridge the gap for people who aren't quite in a position to buy yet.

Obviously all the terms could be whatever you wanted them to be.

Hope this helps!

On Wed, Feb 2, 2011 at 7:55 AM, Sharon Villines
<sharon [at] sharonvillines.com>wrote:

>
>
> On 2 Feb 2011, at 12:27 AM, Kristin Wells wrote:
>
> > We did just start a
> > lease-to-own program.
>
> Can you give us the details? Generally, these require that the owner be
> able to forgo the capital that is invested in the unit until ownership is
> transferred. How are you handling that?
>
> Sharon
> ----
> Sharon Villines
> "Let us make a special effort to stop communicating with each other, so we
> can have some conversation." Judith Martin
>
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-- 
Kristin Wells
Daybreak Cohousing, LLC
503.754.6776
Kristin [at] daybreakcohousing.org
www.daybreakcohousing.org

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