All Forum Posts by: Brian Graybow

@Account Closed yes, agree with you on those counts.  Owner financing is definitely allowed and has been done in the past (of course, sellers usually want their money immediately and the house off their plates).  

Any other ideas of non-equity financing that banks would allow?  I have come across unsecured personal loans up to about $100k but the interest rate is prohibitive.  We allow unit renting, owners could do a rent-to-own arrangement, and we have a few bungalows the community owns dedicated to renting out during the summer.

Given this unique arrangement I am leaning towards the community being open to having a bank be a partial owner by purchasing the buyer's shares, and over time allocating the # of shares allowed to the buyer instead of the bank after payment, but that's also assuming we can find an entity willing to put money in!

Hi - I opened a more specific post about the financing situation here under the title Co-op Community Unit Finance Options: https://www.biggerpockets.com/forums/50/topics/269...

If you're interested about the actual community etc. on a personal level we can connect offline and I'll gladly tell you more.

@Account Closed great questions. In short, properties get sold at a rate of about 1-2 per year, however there are currently 4 homeowners looking to sell which is unusually high for us. While we are not opposed to a bank being a part of the member's mortgage, an actual bank being a member would probably be frowned upon or need some sort of bylaws change. I do not believe we have experienced a default on payments for the 80 years we have operated, but in such an instance the cooperative has right of first takeover, which banks understandably would not agree to.

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

Hello! I currently own a second house upstate in the Hudson Valley in a unique cooperative among 75 other houses but shares in the land. Looking to use this to creatively come up with opportunities to finance future homeowners.