What is a Housing Cooperative?
With so many Cooperatives in Los Angeles it is not uncommon to run across one while you are searching for property in the MLS. They will typically be below market but in actuality they are just priced differently because they are coops. <P>
In the United States, it is estimated that more than 1.5 million families of all social levels live in property that is owned and operated through cooperative associations aka Coops. These folks have found a way to fulfill their American dream of owning a home by embracing the cooperative concepts.
Please keep in mind that Cooperative housing is not a new idea. The first recorded housing cooperative in the country was organized in New York City in the late 1800s. Now we can find them through out the US in most major urban areas such as Los Angeles, San Francisco, Chicago, New York City, Washington, D.C., Chicago, Miami, Minneapolis, Detroit, and Atlanta. <p>
So what is a Cooperative? A Cooperative is a different type of ownership instead of you owning in a traditional way members own a share in a corporation that owns or controls the building(s) and/or property in which they live. Each shareholder is entitled to occupy a specific unit and has a vote in the corporation. Similar to a Condominium concept every month, shareholders pay an amount that covers their proportionate share of the expense of operating the entire cooperative (similar to HOA’s), which typically includes underlying mortgage payments, management, property taxes, maintenance, insurance, utilities, and funds to the reserve funds. There are many benefits to cooperative ownership. Some of these include personal income tax deductions, lower attrition people tend to keep their units longer, lower real estate tax assessments, lower maintenance costs, resident participation and control, and being able to avoid investor ownership which would lead to renters. <P>
Cooperatives may include townhouses, apartments, mid-and high-rise apartments, single-family homes, Condos, student housing, senior housing, and mobile home parks. The purchase price of cooperative membership can be left to the market or the price can be maintained at below market in order to preserve cost. All cooperatives follow a common set of principles issued by the International Cooperative Alliance. <P>
The main idea behind of a cooperative is democratic control by the owner/members in order to achieve an agreed upon common objective. As you can see there are definite benefits to buying a Cooperative. Typically properties that are Cooperatives are price below that of conventional owned property.<P>