Cohousing-L Mailing List: Re: A Conversation on the Economic Crisis: How To Do It?

[Dirk Herr-Hoyman (hoymand]

Since I'm not able to attend this teleconference, let me offer a few  
points
on what's happening here at Arboretum Cohousing in Madison WI.

Somehow, we managed to weather the financial storm (not to mention
the worst winter in 100 years) to create a 40 home community.  We are
seen as the most successful condo style project in the Madison area
this year.  When I say to someone in local real estate that we are at
95% sold before movein, jaws drop.  All around us are condos at 5-50%
sold.  Of course, we have a different product, it's not just a house you
are buying, it's a community.

Our banker has been saying recently that we are the best thing in his
loan portfolio.  He's got condo projects all over the state, which  
are not
moving all that well.  Initially, we were seen as a fair sized risk  
within
his bank and the local banking community.  Now we are seen as a
high performing asset.

We are currently in the Closing stage, where we find out if our members
can truly find the financial means to join the community.  Many have
been able to close just fine, some didn't need to sell homes.  However,
there have been some with challenges in selling their homes.  We've
done some self-help within the community, staging and cleaning for
example, as well as talking about what does and doesn't work.  Even
with that help, some are still having trouble selling their existing  
homes.
We have devised a Land Contract, which our lender has approved, with
mildly generous terms for these home owners.  This allows for sharing
of holding costs and keeps committed members in the community who
have been thrown a curveball by the current housing market.  The Land
Contract is only a short term measure, though, and for the folks doing
it it means they are holding 2 properties for a time.

For those with newly forming cohousing projects, this may well be a
time to have some patience.  If you have land, as the Dover group does,
perhaps you go to your lender and renegotiate terms.  Internally, see if
you can structure something so those you take some financial risk now
get a better deal later.  This may be a relatively small group, yet  
having
a few that are willing to take this sort of risk and weather the  
storm will
put you in great shape when things get better.  It is, though, about  
taking
some risk.  If you can do this, you have something to offer banks,  
potential
members, contractors, and so on.  Everyone is looking for who is going
to take that big risk at the center.   This may take several months  
or even
a year or so, it's somewhat like doing a big fundraising campaign.

At the same time, you should hone your vision and look at how you market
your community.  Work on your web site, either create one from scratch
or hone the one you already have going, as this is the #1 way your  
potential
buyers will find out about your community, as well as potential lenders.

End of the day, this is about managing your risk.  You don't get big  
rewards
without taking risks...

--Dirk

On Oct 8, 2008, at 7:55 AM, Bob Morrison wrote:

>   I think we need to have this teleconference or webinar within the  
> next 2
> 1/2 weeks and that we shouldn't wait until after the elections. I  
> agree that
> we will need to have several sessions to properly discuss this. We can
> schedule the second session for after the elections.
>
>   I am in a forming cohousing group that has land but has not yet  
> begun
> construction. The economic crisis has had a major effect on us,  
> that is,
> we're having a hard time getting a construction loan and we're  
> having a real
> hard time recruiting members. We have lots of hangers-on, but few are
> willing to make a financial commitment. The two biggest issues that
> prospective members cite is the fear that they will have a hard  
> time getting
> a mortgage and the fear that they will have a hard time selling their
> existing homes and/or will have to sell them at a fire-sale price  
> when the
> project is finished. (The projected completion date is early next  
> summer.)
>
>   I also sense that this crisis will discourage people from forming  
> new
> groups over the next year or so. Many people are counting on new  
> groups
> forming, because they would like to live in cohousing and none of the
> existing or forming groups are in a location that is feasible for  
> them. We
> should discuss this at a future teleconference or webinar.
>
>   A lot of what we discussed at the national conference last summer is
> already out of date, because of what has happened with the economic  
> crisis
> over the last two months.
>
>
>
> Bob Morrison
>
> Dover, NH
>
>
>
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--
Dirk Herr-Hoyman
Arboretum Cohousing in Madison, WI
http://arboretumcohousing.org