In senior cooperative housing, active 55 and older residents own a share of the community with an equal voice in how it’s run. The tax benefits of home ownership are there but without the hassle of home upkeep. This makes an ideal transition from long-time home ownership to a more maintenance free life.
Senior cooperative housing has been a fixture in the Midwest for over 35 years and is gaining some traction in the South and West with communities in Florida, Texas, Arkansas and Washington. The majority of the 100 or so communities across 10 states sit in Minnesota.
If you’re a baby boomer retiree looking for alternative senior living, senior cooperative housing may be the counterculture flashback you’ve been looking for. And while co-op living is not exactly a senior commune or kibbutz, it does share many of the social aspects such as tending to a community garden, on-site activities, and clubs.
How does Senior Cooperative Housing Work?
Your senior cooperative housing community is a corporation. As a resident, you own the building AND land collectively with the other residents. You and the other residents buy stock in this corporation and become shareholders. Your stock is prorated in value based on the size (square footage) of your home/apartment. Seniors co-ops are operated as non-profits.
The target market for senior cooperative housing is middle to upper middle-income seniors.
Becoming a resident and shareholder requires two costs: a one-time share cost (down payment) and a monthly fee. The share cost can be significant, usually 20% to 40% of the unit’s value. Typical unit prices range from $100,000 to $225,000+.
Mortgages for co-ops are on what’s called a master mortgage, most often HUD-insured on a 40-year note at a competitive interest rate.
Co-op housing shouldn’t be looked at as a major investment. Yes, your home can appreciate but it’s usually limited (called, ironically, “limited equity”) to 1% or 2% a year. This keeps the units affordable for new residents and decreases the selling time.
Should you decide to sell, the cooperative usually retains the first options to buy. Whether the cooperative or a new resident buys, you receive your share cost plus any accrued equity from the sale. Typically, the co-op helps market and sell the home.
Like a condominium, you have occupancy rights as long as you pay your monthly payment. Stop paying and the co-op can “force sell” your membership.
Senior Cooperative Home Types
Senior cooperative housing can come in all flavors: single-family home, townhomes, multi-family, high-rise apartments, mobile homes, etc.
Age of Residents
Just like other age-restricted retirement communities, senior cooperative housing communities follow the law. This means that 80% of homes must be occupied by households with one member who is 55 and older.
Senior Co-op vs. Condo
Residents of a senior cooperative own and operate their community through a Board of Directors elected by and from the residents.
Rather than obtaining outside financing, as in the case of senior living condos, you pay a monthly fee to a master mortgage. One monthly fee covers the “mortgage” payment, taxes, insurance, utilities, cable TV, maintenance, and a reserve for future upkeep of the property and grounds.
All residents have one vote regardless of the size of their home. All residents are owners, unlike some condos. This means there is likely more pride taken in their community.
The Board of Directors approves new residents, ensuring a better social fit for the community.
Typical Amenities for Senior Cooperative Housing
- Fitness room
- Community kitchen
- Community room
- Laundry facilities
- Guest rooms
- Indoor, heated parking
- Outdoor gardens
Typical Services for Senior Cooperative Housing
- Resident managers
- Maintenance of common areas and home appliances
- Housekeeping for the common areas
- On-site transportation
- Social activities such as book clubs, field trips, discussion groups, movie nights, happy hour, and many others
- Personal care available from outside sources at additional cost
Positive Impact on Residents
An Ohio State University study on senior cooperative housing found that the majority of residents felt a positive effect on the following:
- Ease of maintaining home 93%
- Ability to live independently 84%
- Personal safety 82%
- Life satisfaction 80%
- Access to activities and entertainment 77%
- Happiness 77%
- Amount of contact with friends 77%
- Personal privacy 67%
- Physical health 63%
Will senior cooperative housing communities be the next big thing in senior living? Maybe. But for retirees looking for a specific type of living arrangement, these communities fill a niche. It’s another option and that’s a good thing. Not only do you do you get the tax benefits of ownership, you also have an equal voice in deciding how your community operates.