A housing cooperative, by definition, is an alternate form of ownership of homes and property, in which the property is owned by an organization, consisting of x number of shares, and then sold as memberships or shares of the collective organization, to the residents wishing to become members of the community.
It’s estimated that over 1.5 million Americans have chosen to take this unconventional route to homeownership. Living in a housing co-op comes with a long list of perks including more square footage for your money, less maintenance, and a strong sense of community. But perhaps the biggest advantage of all is the significant savings in cost between a housing co-op and a traditional mortgage or apartment lease.
Why are housing cooperatives so much cheaper?
With housing cooperatives, you make an initial purchase of your home usually somewhere in the range of $15,000- $30,000. Since housing cooperatives are a corporation, the business covers the rest of the cost of the mortgage. Essentially everyone who lives in the co-op contributes to the overall fund which gives them equal shares of membership.
Once your initial payment is made, you will only be responsible for monthly utilities and monthly maintenance fees. What area in the country you live in will obviously affect these costs, but typical utility costs average around $250 per month and cover things like electricity, water, gas, sewer, and trash pick-up. The monthly maintenance fees usually run around $500-750 per month.
No property taxes
Another huge area of savings of a housing cooperative is the fact that as an individual you are not responsible for property taxes. The corporation that owns the co-op will pay the property tax for the entire property which means you will never again have to worry about budgeting for that cost. Technically, every time you pay your maintenance fees, a small portion of that fee goes into a collective escrow account to be used for property taxes. But you happily never see the bill!
No repair costs
While you do pay a monthly maintenance fee, you are not responsible for the cost of major repairs. So, if the roof starts leaking or the hot water heater quits working, the housing co-op management will take care of the costs and repair.
This can be particularly freeing not only for those who dread covering the costs of repairs but also for those who are DIY challenged. Also, with a co-op you are only responsible for the upkeep inside of your unit. And in many cases, even the outside lawn and landscaping are provided by the co-op. This means no mowing costs, no snow removal costs, etc. plus you have the peace of mind knowing everything is taken care of.
While a housing cooperative may not be the traditional method of homeownership, it certainly is a financially smart move for those looking to save a little money or for those who currently can’t afford to own a home.
If you're ready to benefit from the cost-savings of co-op membership, give us call. We'd love to discuss availability and price with you.