Cohousing-L Mailing List: Co-Purchasing for Affordability and Investment

[Phil Lynes (plynes]

(My first posting)  I am heading up our Affordability Task Force and would like 
to find out how other cohousers have addressed the subject of co-purchasing.  

I understand that many communities have individual households which have 
entered into mutual agreements where the purchase price of one unit is shared 
between two or more parties in such a way that when the unit resells the equity 
growth is shared out to the owners in proportion to their initial shares of the 
original purchase.

What we are considering is a larger pooled fund into which any of our members 
who want to invest can do so and from which we can establish copurchase 
investments in other members units.  The fund investors will normally not be 
able to get their money out until a unit which has been invested in 
("co-purchased") is sold.  Then the proportional gains from that sale which is 
realized by the fund can be returned to our investors in proportion to their 
share of the fund (minus expenses and a percentage for the fund itself so it 
can grow over time).

While the concept of co-purchasing seems simple, the more we think about it the 
more questions seem to arise.  We want to allow a household to "buy-back" some 
or all of the co-purchase when/if they are able but to be fair that should 
probably only be done after a proper real estate appraisal is done so that we 
can figure out what the new proportion of ownership is.  Have any of you had to 
deal with this issue?

What should happen if/when one of the fund's investors needs to liquidate?  It 
seems we should have some "early withdrawal" penalty but would only be able to 
do that if we could replace the lost funds with a bank loan or something.  It 
would be preferrable if the investor could sell his "shares" to someone else 
but then how can they work out a fair price?  It is a bit like buying and 
selling futures.  Do any of you have experience with dealing with that issue?

Finally we have begun talking with an outside financing source which would 
charge us interest for a variable line of credit based on no collateral other 
than the fact that our own investors would put up nearly half the fund and take 
the first risk if a borrower defaults (or real estate prices fall).  Have any 
of you tried to do something like this?  How has it worked out?

Thanks for giving me the benefit of your combined experience on this.
Phil Lynes
Jamaica Plain CoHousing Affordability Task Force
Jamaica Plain, Boston, MA
_________________________________________________________________
Cohousing-L mailing list   http://www.cohousing.org/cohousing-L
Unsubscribe, archives and other info at: