Senior Housing Cooperatives

Seniors over age 55 have a wide range of housing options, including: single family residences, townhomes, condominiums and apartments. One housing option many people are not familiar with is a senior housing cooperative. According to seniorcoops.org, there are more than 140 senior cooperatives in the United States, with new buildings opening seemingly every month. The majority of senior cooperatives are located in Minnesota, but the concept is spreading to other states, including Colorado, Iowa, and Wisconsin, as well as Kansas and Missouri.

What exactly is a senior housing cooperative?
A senior housing cooperative is a member-owned, member-governed collective living community. Each member purchases a share in the cooperative corporation which allows the owner to live in a specific unit in the cooperative building.

Below are a few features that differentiate a cooperative from other types of senior housing:

• Collective ownership: Members own a share of the entire cooperative rather than an individual unit.

• Financing: Members typically pay a fraction of the value of the unit they occupy when they purchase a share in the cooperative. The remainder of the cost is funded through a master mortgage covering the entire property. Unlike a condominium or townhome, members are not personally liable for a mortgage, and members do not need to obtain their own financing. Many cooperatives are financed with HUD-insured mortgages which have low interest rates and terms up to 40 years. This helps to keep monthly carrying charges affordable.

• Upkeep: Members pay a monthly carrying charge that provides for interior and exterior maintenance, a portion of the mortgage and taxes and deposits to reserve accounts for future replacements.

• Governance: Members elect a board of directors from amongst themselves. Each share has a vote, so the cooperative is governed democratically.

• Equity: Many cooperatives have a limited equity appreciation plan which limits the appreciation in membership shares to 1% or 2% annually. This limits the upside potential of a cooperative, but it also helps to keep the cooperative affordable for future members.

• Resale: Some cooperatives assist members with the resale of their shares.

Living in a cooperative eliminates the time-consuming tasks of home maintenance, yard work and snow removal. This provides members the freedom to pursue other interests. Members of a cooperative can be as social or private as they wish. Each cooperative is unique, but they commonly include amenities like: community gardens, workshops and libraries, as well as game and fitness rooms.

Senior cooperative living offers an alternative to more traditional housing options and may be a great fit for individuals and couples over age 55.

For additional considerations, please reach out to the Assurance Solutions Team at Mahoney.