Re: 50% rate of return
From: Lynn Nadeau (welcomeolympus.net)
Date: Fri, 21 Apr 2000 21:04:03 -0600 (MDT)
If I hear you right, our first 10 households, which put in $10,000 each 
prior to our actually having lots to have title to, would have generated 
a debt to the group of $50,000. A debt that could be "paid" in various 
ways. If it went to reducing their buy-in price, that would mean that the 
other, last, ten families would each have their buy-in price raised by 
$5000. Or we could have taken $50,000 out of what was available for 
building a common house-- a nearly 20% budget cut from a budget which is 
already snug. Or count on selling two more lots, with a resulting 
reduction in common land space (and two more families to have room for in 
the common house). This seems counter-productive. 

 Sure, one could invest one's money instead of risking it. But people who 
are trying to build cohousing are typically willing to put in amazing 
amounts of time and money, because they want it to happen. If speculating 
in cohousing projects could realistically be counted on to bring a 50% 
return, we'd have megabucks pouring in, all over the country. I'd send 
you a loan, myself. Truth is, it costs-- both time and money. This same 
line of thought could lead to the conclusion that, just as people could 
be getting interest and dividends on their money in the stock market 
instead, so, too, could they be getting paid $5-$10-$50-$150 per hour for 
their time, instead of donating that. It really isn't rational to donate 
massive time and money, but hundreds of people have done it and are doing 
it. 

I say you set a minimum contribution to be "associate members" or 
whatever you call it, to be committed, with no guarantee of money back 
till someone shows up to replace you. If people are going to be coming up 
with enough money to buy a house, they can come up with an initial buy-in 
cost. 

If you run short of cash flow, you ask for voluntary no-interest 
offerings, which will add to the person's credit, at face value, at full 
buy in time. If there is no such money available, then you need to either 
adjust the expenses, or pay to borrow money, whether internally or 
externally. But it shouldn't ever be necessary to borrow at 50% interest!

And if you do promise a 50% return, or any other financial perk (10% 
would still be better than a  CD or Money Market account) , you had 
better have a very clear legal contract, so that you are not responsible 
to pay that amount if you simply don't have it. Or I suppose you could 
get sued for breach of contract. 

Lynn at RoseWind
Port Townsend WA -- where we only wish we had an "extra" $50K to disburse 
for anything!

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