Co-op Community Unit Finance Options

[Brian Graybow]

Hello,

I own a second house in Putnam Valley, NY, about 1 hour north of New York City, in a cooperative community.  We are a "land co-op" made up of about 75 freestanding homes across 125 acres.  Each member owns the physical house they live in but jointly own shares in the land.  The majority of these homes are second properties used as a weekend escape with a handful of primary residences.  Some houses are seasonal (April thru October) and others are full time/winterized.  There are twice annual membership dues to the cooperative which pays for community expenses such as groundskeeping or taxes, and the coop itself has a positive cash reserve.

We currently have 4 houses up for sale ranging in price from $75,000 to $210,000.  Historically this community has been cash-only transactions between buyer and seller but in order to continue to attract new and young members we are looking for possible financing options for these individuals.  Most banks will not offer a mortgage to our members because of our set-up and the prices are too high to expect people of moderate means to purchase. The people who buy here are buying for experiences and memories, not so much investment return.

From speaking with other financial entities and members of the community, we are looking for partners to assist in offering loans of some sort, such as:

1) Direct loan to buyer of house (less a down payment), and then payment arrangement between loaner and the buyer

2) Loan to the cooperative as an entity who then administers the loan between buyer and cooperative, with payments paid back to financial organization from cooperative

3) Loan to buyer with cooperative as co-signer, therefore making the cooperative the ultimate responsibility in the event of default

4) Create a member-funded reserve fund or actively managed account which will then be used for giving out loans to new members at an interest rate. (Note: I personally do not think the membership voluntarily will give so much money to let this get off the ground)

5) Any other options I haven't thought of

I have done a fair amount of research on possibilities and could use others' ideas behind what is realistic and who to turn to.

Thanks so much!

Brian