This is Part 2 of 2: Cooperative Housing
Co-ops, once very popular, seem to be making a comeback in these more economical times--learn more about the features of co-ops and make it an option to consider for a home purchase.
Where are communities found?
Health and Wellness Philosophy
BG: Does this type of housing make living or retiring in the city more affordable?
KH: Yes. In fact, it is one of the most financially advantageous age 55+ options available today. In co-op style city retirement you'll reap the benefits of shared costs and collective bargaining. Purchasing items such as cleaning services, in home care or personal fitness classes can be done in a pooled manner by the cooperative members effectively and, therefore, priced down.
Furthermore, overall operating and maintenance expenses are shared by the membership, making the overall cost of living more affordable than a single-family home. When you take the profit-driven middle-man out of the equation, you have control over your costs that most would not have in other retirement communities, be they city or suburban, without the burden of sole ownership.
BG: What is the definition of cooperative housing?
KH: Good living! [laughs]
But seriously, the true definition of a co-op for our purposes is a business organization owned and operated by a group of individuals for their mutual benefit. You know that saying, "it takes a village to raise a child"? Well a co-op is an extension of that thought that wisely says, "It takes a village to raise a village!"
Humans are communal in nature; individualism is historically a newer concept and I don't think it's all it's cracked up to be, especially as we age. A co-op is a housing model that allows members to be connected, secure and in control.
(Whether in the suburbs or city, a co-op community is a good economic choice.)
BG: Are senior ones any different from non-age restricted co-op communities?
KH: It is in one very important aspect: buildings can be designed to help you age-in-place. It won’t look institutional, but there will be subtle differences that you won’t think about until you need them. The standard family home would need major renovations to accommodate someone as they age or encounter medical difficulties (for example, what if we need a wheelchair in 10 years?)
Here are a few features to implement:
(Lest you think the above items are never implemented, the items listed above are all at my co-op and I can tell you from experience they are all appreciated very much.)
BG: I know from experience those things are important and become more so with aging. Your website talks about community as an important aspect of living in a co-op. How do you achieve a feeling of community in a co-op? Do you consider this unique to cooperatives?
KH: Community is intrinsic to the co-op structure. When you own something with other people, and you see them every day, a cooperation is THE most important aspect to making it a successful and pleasant place to live. In co-op's, you get to form governance committees and run a democracy within your building. The incentive to get involved with the community is obvious. Community-building is a huge advantage of co-op's.
Additionally, the amount of community space set aside at a senior cooperative community (at the request of the members), is significant for an urban location. Architects call this “Community Space Science.” Whether an art or a science, it is thoughtful design with an intended result: to get people to come together.
BG: Seniors are very interested in saving their hard-earned money. Can you explain the financial advantages of co operative housing and how it saves money for seniors in retirement?
KH: In a co op, the costs to operate the building are equal to what members pay monthly. It's owned by the members so there is no third-party interests seeking to gain profit from the project. It essentially operates as a zero profit enterprise. Any increases in assessments reflect the actual costs to operate the building, and are voted on by members.
We know of no way to provide the consumer with more high quality for less money because of the manner in which the project is financed. Members make their "down payments" or purchase "shares" in the cooperative prior to the commencement of construction. As a result of this, members eliminate the high return requirements that traditional real estate investors will require. Eliminating this return or "equity yield" allows the co-op members to retain control and essentially get more for less, by eliminating the return-seeking investor.
Additionally, this co-op model offers predictability that is uncommon in your own home, much less, typical retirement communities. The Co-op has robust reserves for maintenance/future repairs and eliminates the profit-seeking owner that raises monthly assessments as much as the market will bear annually. Members are in control of all of this and have total transparency on the co-op’s costs since they own it.
BG: I personally live in senior cooperative housing. It was a new experience for me and I am amazed at how economical my living costs are. We do have a small raise of the co-op fees each year but we get so much more from the co-op overall. I have had free replacement of windows, doors, bathroom tiles, disposal, dishwasher, refrigerator and laundry machines and on and on. The co-op pays for nearly everything. They will issue a list of what they will or will not cover so ask for this list.
BG: On my website I describe co-ops as being affordable, is this description accurate?
KH: As a general rule, limited equity co-ops are more affordable than other comparable options because of the unique manner in which they are financed and the long-term resident control over operating costs.
In many typical retirement communities, the residents may receive annual or even monthly rental increases. Co-op assessment increases must be approved by the cooperative. Also, the limited equity component of the project makes for a longer term more affordable solution.
Many "affordable projects" have accompanying public subsidies that require people who live in the asset to be a certain percentage under median family income. Co-ops in general are typically more market-rate opportunities. Within the market-rate umbrella, they tend to be more affordable, particularly over the long term.
BG: Co-ops as an investment -- do they appreciate as well as condominiums and single-family home investments?
KH: Limited equity co-ops like this one have a HUD mandated limited appreciation on the Share Price or "Down Payment," such a limit on appreciation is capped at 2% per year. This is done to make the project more financially predictable, stable and liquid for the membership.
Condos tend to go up or down with the market, but limited equity co-ops (like the one we are talking about) only increase by 2% per year and therefore grow long waiting lists (reducing the difficulty of selling your share if needed). The longer the co-ops are around, the more affordable they become. (Not all co-ops are like this one but generally have the same principles.)
BG:Who determines how much the monthly co-op fee is raised over time?
This is a democratic process. The member-elected board of directors must vote to approve an increase in assessment. In my co-op community, appliances are replaced without cost to me when necessary--do all co-ops have that appliances are replaced--why is that?
There is a schedule for appliance replacement. This typically comes out of an established reserve account. The appliances in your unit are actually the property of the co-op, so the co-op has a responsibility to fix or replace them when needed.
KH: Most 55+ cooperatives have plenty of common areas including libraries, kitchens for parties and potlucks, event space, outdoor space, security cameras, underground parking, community garden space, and some have wood shops and car washes. Some co-ops have dining services and a restaurant space that is owned by the co-op and some are open to the public.
BG: What would your senior cooperative retirement community have that another doesn't--what might another have that you do not -- who determines the features?
Urban locations offer many different amenities and features than our suburban counterparts.
We will also have a restaurant on the ground floor and exceptionally large balconies with electrical, gas and water supplies. The location and these features were specifically based on initial member input.
The only thing we wouldn’t have is wide-open space, but that feature is the main distinction between city vs. rural retirement.
BG: Are senior cooperative retirement communities found more in the city, suburbs or country? If so, why?
KH: Most of the nation's co-ops are found in suburban locations so a co-op in a city would be unique.
Until pretty recently, there had been a steady movement out to the suburbs since immediately after WWII. Retirement communities followed that trend as well. But now we are seeing a retraction back inward to the city, and like much of America, there is an increasing desire on the part of people over 55+ to live in urban locations.
The reasons for this range from financial to social to environmental. But I think many people are simply sick of being isolated and crave more human interaction. Plus with the recent oil spills, the general hassle of car maintenance, and health concerns people are also looking for car-free, walkable environments. (Today's cities are improving transportation systems to become more walkable, bike able and car-free.)
BG: I have discovered, being a senior, that health, money and mental activities are of highest priority in senior living. How can a co-op handle these issues of health and wellness.
KH: One way to address these issues is by partnering with Health Providers—either or campus or nearby—to bring health and wellness education to the community. An example of community education is a Wellness Fair. Seniors want to stay informed. We think intellectual discussions on health and how it relates to seniors is vital to a high quality of life.
This is an information only website.
We make no recommendations or opinions. Please make your own careful investigations of communities mentioned on this site.
The features of a cooperative housing community vary according to the community--please check the features of individual communities carefully.