Housing Cooperatives
Just about everyone in New York City knows what a co-op is. More than 1.5 million New Yorkers live in one, and the concept is spreading to the rest of the country.
In almost every other real estate concept, including all those we’ve discussed so far, you buy and own your property, whether it’s a single-family home or an apartment in a larger building. But that’s not the case with co-ops. Instead, a corporation owns both the building and your apartment. You therefore buy membership in the corporation; doing so gives you the right to live in a specific apartment.
And because it’s a membership-based corporation, the members of that corporation get to decide who’s allowed to join (and thus move into the building). When you bought and moved into your current home, your neighbors had no say. But in a co-op, they have lots of say. In fact, they’ll require you to submit to a background check and a series of interviews with other residents. If they don’t like you—they don’t have to say why—you won’t be allowed to purchase your home (uh, er, your membership in the corporation). Madonna and Richard Nixon had their applications rejected by co-op boards.
Many co-ops were constructed by trade unions, to ensure that their members—and only their members—had places to live. Student housing co-ops are also common at colleges throughout the country. And that’s a key appealing aspect of co-ops: Once you’re in, you can help make sure that only folks you’d enjoy living with come in, too!
You can learn more at coophousing.org, the website of the National Association of Housing Cooperatives.
Unless you have the view of Groucho Marx, who said he would never join a club that would have him as a member.
Niche Communities
Niche communities are designed for people who share a common identity. This could be union membership, artistic inclination, religious faith, sexual orientation—or even being alumni of the same university. Entrance fees range from $1,000 to $500,000 or more, and monthly fees can be thousands of dollars. Two examples are the Fountaingrove Lodge, an LGBTQ community in Santa Rosa, Calif., and the Village at Penn State, a residence for the school’s alumni.
The Village Model
The concept is simple: Instead of leaving your home to move into senior housing or assisted living, you and others in your neighborhood form a nonprofit organization that provides services so you can all keep living at home.
A 2012 study published by The Gerontologist found 42 villages across the United States; by 2016, according to the Village to Village Network, that number had tripled. There are now 205 such villages in 38 states, and more are being established each year.
Some villages comprise just a few city blocks; those in rural areas might cover a 20-mile radius. Typical services include modifications to make your home accessible, transportation, meal delivery, dog walking, health and wellness programs, social activities, nurses and care managers.
Most villages have 150 to 200 members. Entrance fees can range from $1,000 to $500,000 or more, depending on whether the price includes the cost of the property. Monthly fees range from $50 to $1,500. The average resident is a middle-class, 74-year-old woman.
To learn more, visit vtvnetwork.org.
Don’t Just Choose The Type—Choose The Location, Too
All the housing environments described above can be found in the Midwest as well as on the coasts. Both location and community should be considered when deciding which type of community appeals to you. An ideal location might be one you have never considered.
For example, 39% of the U.S. population lives in a county that borders an ocean, according to the National Oceanic and Atmospheric Administration, suggesting that lots of folks want to be near the water. Even if that describes you, you can’t ignore the Midwest. After all, being far from an ocean doesn’t mean you’re far from water. Millions of Americans live on or near a lake or river, with benefits they say strongly outweigh being next to an ocean: Lakes and rivers contain fresh water, not seawater and don’t suffer from sharks, jellyfish or seaweed. Many lakes even offer waves (Lake Michigan gets two- to four-foot waves in the summer and four- to eight-footers in the winter; Lake Superior’s waves can hit 20 feet). And water sports and boating on both are common.
The Midwest offers another advantage, too: When we no longer need tens of millions of acres for farming and ranching, thanks to the innovations described earlier, all that land will become available for redevelopment. This suggests it will be both cheap and plentiful.
And if you regard living in the Midwest as being in the middle of nowhere and a million miles from anywhere, fear not—thanks to self-driving vehicles. You won’t mind spending two or three hours in a car to get to a major urban center, according to research by the Global Cities program at the Nature Conservancy. Its study says that the easier it is to get from one place to another, the more willing people are to travel.
In other words, if you can enjoy a luxurious commute that allows you to read, watch a video, listen to music, play a game, interact with others—or even sleep—you won’t mind being in a car for long periods. And I haven’t even mentioned the productivity opportunities a long commute will provide you: you can study, participate in meetings virtually, and do as much work as you wish, undisturbed by others.
So as you and your clients contemplate the kind of community you’d like to live in, give some thought to where you’d like to live as well. Your ideal location might surprise you.
This article was written by advisor Ric Edelman and is chapter 18 of his new book, The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later, published in March 2017 by Simon & Schuster.