Affordable Cohousing: Sections 10 - 13
From: Chris ScottHanson (cscotthansonmac.com)
Date: Mon, 20 Apr 2015 09:39:24 -0700 (PDT)
A SELECTION OF IDEAS FOR CREATING MORE AFFORDABILITY IN YOUR COMMUNITY
[submitted to cohousing-l in weekly installments, for comment and input.]

The strategies outlined in the series to follow have been collected over the 
past 20 years of doing cohousing projects across the US and Canada.  Many of 
the strategies outlined below are what I call Internal Banking.   These 
“internal banking” relationships are magical when they happen, and it would 
seem they can only happen when there is a strong sense of  community, and trust.
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10. Shared Units

Other prospective members might be encouraged to consider sharing larger units, 
such as two bedroom “bi-master” suites. This can be done either as tenants in 
common (see 4. above), or as the owner-member renting to another 
resident-member. Obviously the households sharing a large unit will have to 
share a private kitchen.

11. Community Owned Rental Unit

Some prospective members can't afford to purchase. You can greatly expand 
economic diversity in your community by allowing for one or two rental units. 
Note that this can negatively effect mortgage qualifications and insurance 
underwriting.

Some communities own a rental unit together as a community. This has to go in 
the original budget, and must be accounted for in the original unit pricing. If 
you're building 25 units and one is going to be a rental the price of the 24 
units that are for sale must be slightly higher, approximately 4% higher. As a 
community you will own that 25th unit, and you will have rental income from it.

In some groups a subset of the membership, usually five or six households, come 
together, pooling their money to purchase a rental unit as a group. They act 
much like a investment club, managing their assets and receiving rental income. 
This needs to be approved as a strategy by the whole community since it can 
negatively effect mortgage qualifications and insurance underwriting for other 
owners.

12. Participating Nonresident Owners

Some communities allow outside investors to purchase units as rentals. When 
doing this we always hope that the purchasers can be participating nonresident 
owners who are engaged in the community but do not live there. As a community 
you will want to set a limit on this. There is some debate as to what number of 
rentals is healthy in a cohousing community. Four rental units in a 16 unit 
community seems to work fine. Again, this needs to be approved as a strategy by 
the whole community since it can negatively effect mortgage qualifications and 
insurance underwriting for other owners.

13. Purchase of One or More Units by an Outside Affordable Housing Entity

Some communities allow outside affordable housing entities to purchase units as 
rentals. As good as this might sounds it can be challenging to implement 
because agencies, church groups or affordable housing programs who are capable 
of buying one or more units will have certain rules and “strings” attached. 
They will also have a decision making bureaucracy to be navigated, and they 
often take way too long to engage and make the necessary commitments. This 
needs to be approved as a strategy by the whole community since it can 
negatively effect mortgage qualifications and insurance underwriting for other 
owners.

(Note: please submit corrections, suggestion or comments to Chris ScottHanson 
so that the original of this document can evolve to be clearer, and more 
complete.) 

_____________________________________
Chris ScottHanson
(206) 601-7802


The list of 13 strategies:
1. Internal Down Payment Assistance 
2. Outside Down Payment Assistance
3. Second Mortgages
4. Co-purchase Options
5. First Time Buyers
6.  The Reduced Monthly Condo Fee Subsidy.
7.  Maintenance Reserve Reinvestment
8. Unit Price Buy Down
9. Design for Affordability - Capital Costs and Operating Costs
10.  Shared Units
11.  Community Owned Rental Unit
12.  Participating Nonresident Owners
13.  Purchase of One or More Units by an Outside Affordable Housing Entity
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