New Visitors Privacy Policy Sponsorship Contact Us Media
Baby Boomers Family Green Home and Auto In Critical Condition Just Starting Out Lifestyle Money
- advertisement -
News & Advice Compare Rates Calculators
Rate Alerts  |  Glossary  |  Help
Mortgage Home
Auto CDs &
Retirement Checking &
Taxes Personal


Cheap, unconventional housing alternatives

Page | 1 | 2 | 3 | 4 | 5 |

Cheap living alternatives

Not a condo, but a co-op
If houseboating and RVing are too exotic for you, consider buying into a cooperative. In many parts of the country, except for elite properties in New York City, a co-op is cheaper to buy than a condominium, but offers the same sorts of amenities.

- advertisement -

In a cooperative, each resident owns a share in a corporation that controls the building or complex in which they live. Each shareholder has a right to occupy a specific unit and has a vote in the corporation. Shareholders pay a monthly amount that covers their proportionate share of the expense of operating the entire cooperative, which typically includes underlying mortgage payments, property taxes, management, maintenance, insurance, utilities and contributions to reserve funds.

While most co-ops in New York City are market-rate condos selling at whatever the market will bear, in much of the rest of the country, co-ops limit the resale value of an owner's shares. The maximum resale value is predetermined by a formula established in the cooperative's bylaws. This keeps the property affordable, prevents speculation and tends to encourage people to live there for a long time.

In the last five years, as housing boomed, limited equity cooperatives didn't seem attractive to many people because they didn't represent an opportunity to get rich quick. But as the housing market has cooled, they are back on some radar screens.

Paul Solomon, board member of the Southeast Association of Housing Cooperatives, lives in a limited equity cooperative in Atlanta. Solomon says he chose the cooperative because, "I couldn't find any place of equal size and location for anywhere close to what I pay for my co-op. When I tell people what I pay, they can't believe it," Solomon says.

The outlay
The community in which Solomon lives is ideally located in downtown Atlanta. There are 70 homes in the gated community with lush landscaping and a beautiful swimming pool. Owners of 1,400-square-foot, three-bedroom, two-bath units pay $833 per month. Owners of two-bedroom, one-and-a-half bath, 1,100-square-foot units pay $725 per month. These fees include building and lawn maintenance, water and sewer, insurance on the buildings and real estate taxes.

Owners are limited in what they can sell their homes for by a formula that takes into account its initial sales price and the length of time they've lived there. The value is also affected by how many other owners are selling and for how much. For example, one of the two-bedroom units is for sale at $63,000.

In many parts of the country, it is difficult to persuade a bank to give a buyer of a cooperative a loan because the borrower doesn't "own" an identifiable bit of property. So in Atlanta, the cooperative association has begun its own bank to lend money to potential buyers. Currently, buyers may borrow up to $30,000 for 10 years at a fixed rate of 9.5 percent.

Assuming that a potential buyer is able to put down cash for the remaining $33,000 on the unit that's currently for sale, their monthly carrying charges will be $388 plus the monthly fee of $725, plus gas ($75) and electric ($75) and insurance ($50) on the contents of their dwelling, for a total of about $1,300 per month. The percentage of the total that represents the co-op's mortgage interest payment and taxes is tax-deductible.

Next: Home sweet factory-built home ...
Page | 1 | 2 | 3 | 4 | 5 |
Retired RVers on the road
Manufactured homes
Evaluating a retirement community
Home equity can be used to buy car
Interest Rate Roundup
Interest Rate Roundup

Home Equity
Compare today's rates
$30K HELOC 4.60%
$50K HELOC 4.09%
$30K Home equity loan 4.91%
Rates may include points
  Calculate your payment on any loan  
  How much house can you afford?  
  Can you borrow from your home equity?  
Rev up your portfolio
with these tips and tricks.
- advertisement -
- advertisement -

About Bankrate | Privacy Policy/Your California Privacy Rights | Online Media Kit | Partnerships | Investor Relations | Press Room | Contact Us | Sitemap
NYSE: RATE | RSS Feeds |

* Mortgage rate may include points. See rate tables for details. Click here.
* To see the definition of overnight averages click here. ®, Copyright © 2015 Bankrate, Inc., All Rights Reserved, Terms of Use.