WHAT IS THE FINANCIAL STRUCTURE OF A SENIOR HOUSING COOPERATIVE?
- Master Mortgage Loan - Brown Deer Cooperative will use a master mortgage loan to finance the project, which ensures a fixed low interest rate for a longer term. The cooperative holds title to the property, assuming mortgage and tax obligations, relieving members of direct liability; members simply agree to pay their monthly fee, which includes an allocated portion of the mortgage principal, interest, and taxes. Upon eligibility, members retain tax deductions for mortgage interest, as well as real estate taxes. Cooperatives typically cost less to operate and experience the lowest default rate of any housing alternative because of their not-for-profit nature, membership involvement, and shared services.
Share Price - The Share Price represents the difference between the Total Share Value and the prorated portion of the cooperative's first mortgage loan. The Share Price is approximately 40%-60% of the share value, which keeps cooperative homes affordable in comparison to single-family homes, town homes or condominiums listed at full market price.
Monthly Fee - The monthly fee includes a proportionate share of the cooperative's master mortgage, real estate taxes, insurance reserves, maintenance, and utilities (gas and water). A detailed cost/lifestyle comparison is enclosed, listing all that is included in the monthly fee. A cost breakdown will be provided to each member before finalizing their purchase.
WHAT ARE THE ELIGIBILITY REQUIREMENTS?
Brown Deer Cooperative is an age-restricted community. All owners must qualify for membership by meeting the minimum age and income requirements.
HOW DO I FINANCE MY SHARE PURCHASE?
Because Brown Deer Cooperative is a limited-equity cooperative, a portion of the proceeds from the sale of your home can be used to purchase a share in the cooperative, leaving the remainder of your equity to invest, save, or spend on personal enjoyment. The interest from investing equity can be used to pay a portion of the monthly fee, therefore reducing monthly living costs. During the development phase, buyers of a cooperative either use available funds or take out a short-term home equity loan to pay for their membership share until they have sold their current home. The interest on the home equity loan is tax deductible.
WILL THE VALUE OF MY HOME APPRECIATE?
Brown Deer Cooperative will use a Limited Equity Formula, estimating a limited appreciation between 1% and 3% of the share value, compounded annually. This practice is widely used by cooperatives to keep the units reasonably priced over time, therefore building a waiting list of prospective buyers and promoting ease of resale. The cooperative has the option to change the limited equity formula if it chooses. The following is an example showing the increase in value at 1.5% appreciation per year over five years, using a sample unit, with a Share Value of $234,500:
HOW DO I RESELL MY COOPERATIVE SHARE?
To implement the Limited Equity Formula, the cooperative holds the first right-to-sell. The resale price of the membership share will equal the members' original investment plus the amount appreciated under the Limited Equity formula set forth in the cooperative's bylaws. The cooperative has 60-90 days to market the share and transfer the sale. If the cooperative does not elect to transfer the share, the member may choose to continue to contract with the cooperative or may sell it on the open market to anyone who qualifies for membership. Resale of a cooperative share avoids the fees, title and recording costs of a typical real estate transaction.
CAN I TITLE MY COOPERATIVE SHARE?
The cooperative will provide a way for its members, to title their membership share to meet their estate planning needs, through the cooperative's attorney. Single owner, joint tenants, trusts, transfer on death, or a life estate are typical forms of holding title. Proceeds of sale would go to the member's estate or heir(s), as indicated in their estate planning documents.
CAN I MAKE PERSONAL DESIGN CHOICES?
Brown Deer Cooperative offers a variety of high-end standard and upgrade design options. Representatives of Brown Deer Cooperative will work closely with members through the selection process and any special requests. Personal design selections for standard and upgrade options are available to buyers who purchase during the development phase and prior to construction dead lines.