How a Resident-Owned Community Works for You
What is a Resident-Owned Community?
It is a community in which the residents have joined together and purchased their community from the landlord/owner.
How popular are Resident-Owned Communities?
They have become very popular over the last few years. Today, the residents of manufactured home communities are the largest purchasing force in the industry. Already, over 500 Florida manufactured home communities are resident owned.
How are Resident-Owned Communities formed?
Lifestyle Choice Realty recommends such communities be organized through a residents’ cooperative. It is the method favored by most residents.
What is a cooperative?
It is a non-profit corporation owned solely by the residents who choose to participate. The cooperative purchases the community with money it derives from the sale of shares to residents.
Why form a cooperative?
Lifestyle Choice Realty recommends cooperatives for two reasons. First, the initial purchase is faster and easier because the cooperative buys the entire community, eliminating the need to survey and subdivide each individual lot. Second, the cooperative operates through its Board of Directors, a group of residents elected by all participating residents. They oversee day-to-day operations, so decision-making is more streamlined, practical and focused on residents’ goals.
How do residents buy shares in the cooperative?
Shares are purchased in much the same way as buying any property. Normally, each resident makes a down payment of up to 35% of his or her share of the purchase price and finances the balance.
Is purchasing the community affordable for residents?
Yes. In fact, in most cases, the monthly payment for the purchase price plus the maintenance fee is the same or less than what the resident pays in rent. This allows residents to purchase their community but keep their monthly payments about the same.
How long is the note for and can it be paid off early?
Generally, the note is amortized over 25 years. Normally, the loan balance can be paid off whenever the borrower chooses, leaving only the monthly maintenance fee – usually an amount much less than current lot rental fees.
What does a resident get for purchasing?
Each owner in the cooperative gets a share certificate in the cooperative and a 99-year, non-escalating proprietary lease on the home site. This lease is recorded at the county courthouse. The share and lease become part of the resident’s estate and can be willed to heirs.
Can the share and lease be sold?
Yes. You merely sell the home, cooperative share and 99-year lease to the new buyer.
Is the cooperative share marketable?
Lifestyle Choice Realty’s experience is that homes that include shares in the Resident-Owned Community tend to sell faster and hold their value better than comparable homes in rental parks. The reason is because lot rent increases in rental parks raise the cost of housing and tend to reduce what a buyer is willing to pay for the home. Also, manufactured homes may depreciate over time, but land values generally go up.
What happens if a resident chooses not to buy?
In that case, the resident’s current lease agreement and prospectus remain the same. The main difference is that the resident pays rent to the cooperative and will not be allowed to vote in how the park is operated.
How is the community maintained after a purchase?
The shareholders, who no longer pay rent, pay a monthly maintenance fee (typically, much less than rent payments). Non-shareholders continue to pay rent as before, but to the cooperative. The cooperative’s Board of Directors sets the maintenance fee based on an annual budget prepared by the community manager and voted on by the Board. Since the Cooperative is non-profit, the maintenance fee covers just the cost of operating the community on a day-to-day basis.