People have other options beyond buying and renting a home in Detroit, Michigan. Co-op housing is a popular alternative to traditional housing methods. A co-op is a housing option where the owners don’t own their units. Residents are shareholders within a community of varying sizes.
Financial aspects of co-op housing
Cooperative housing law allows residents to sell their shares on the open market in several ways. All share transactions are subject to the co-op board’s approval. Co-op housing is cheaper than traditional residences because it’s at-cost living. The community takes money from the residents to pay bills. In cities with a high cost of living, co-ops may be attractive for financial reasons. A co-op in a place with a high cost of living will have much higher fees than other co-ops.
Social aspect of co-op housing
People should consider the social aspect of co-op housing before selecting the option. The residents run smaller co-ops, and a larger co-op has a board of directors consisting of some residents. Smaller co-ops allow everyone to pitch in with maintenance and landscaping. The community rules and social interactions help residents share decision-making authority.
Types of co-ops
Co-op structures depend on the specific jurisdictions throughout the US and Canada. Market rate co-ops allow members to buy and sell shares on the open market. Limited equity co-ops set restrictions on the price members can buy and sell shares. Leasing co-ops is where a corporation leases the building instead of owning it. The group doesn’t accumulate equity value, and the co-op sometimes has a cash reserve if the building goes up for sale.
Costs to buy a co-op depend on many factors, including location, costs and amenities. Co-op member fees change with insurance requirements, the ability to lease a unit and pet policies. People should understand the maintenance costs of maintenance fees before deciding on co-op housing. Co-op housing must follow cooperative housing law since there aren’t landlords or tenants. The ability to purchase shares is up to the partners, and new buyers may even need a specific net worth.