Cohousing-L Mailing List: Re: Construction Loan Financing

[Paul Conahan (pconahan]

>I'll hitchhike on your query and add a question:  has anyone found that the
project's legal form (coop, condo, limited liability corp., whatever) has
been a deal breaker (or maker) from the bank's point of view?


At Sunward Cohousing (Ann Arbor), our legal form took the form of a
condominium.  The bank never explicitly told us they preferred this, but
when you are dealing with bankers, the term "radical conservative" is not an
oxymoron.  Since the vast majority of multi-family developments in our area
are condominiums, it seemed prudent to blend in with the scenery as much as
possible.  Also, in our area, since coops are so rare, getting end mortgages
for coops would have entailed using an out of area lender that specializes
in coop financing, at a higher interest rate than conventional loans.  Also,
due to the dearth of coops, coop units would have been difficult to
appraise, and appraisers sometimes get conservative (just like bankers) when
supporting market data is scarce.  This thinking also somewhat influenced
our design and building materials, since (using an extreme example) I
suspect straw-bale construction would have made our bankers spit up on their
polyester suits :-)

Paul Conahan
Sunward Cohousing of Ann Arbor (where the last of 40 households moved in
last November and we have been enjoying common meals for several months now)
http://www.sunward.org