What are the cost benefits of starting a coop in Cambridge?

Submitted by Ioseb_Hates_Money t3_11cyawt in CambridgeMA

A $1M home is a $1M home regardless if a consumer or coop purchases it. So what is advantageous about a coop? Do they get taxes differently, because in Cambridge there is only $5.85 in taxes per $1000 in assessed value, which is amongst the lowest in all Massachusetts. So at the most, I’m thinking that every year, a home that’s $1M won’t have to pay the $5,850/year in taxes.

8

Comments

You must log in or register to comment.

unresolved_m t1_ja5rdna wrote

This is the second post on co-op housing I'm seeing today. What's going on?

18

greyfiel t1_ja88gda wrote

As far as I know, there was a recent post in this subreddit involving availability in a co-op; I think this has sparked interest in why co-op housing is useful and its pros and cons.

8

unresolved_m t1_ja89oiw wrote

I dunno. I remember someone promoting Sterling (and Texas) here - it was quite a bit like a promo campaign. I hope its not one of those things.

1

TheSausageKing t1_ja645u8 wrote

The city has some good information about them here:

https://www.cambridgema.gov/CDD/housing/forhomebuyers/coops

Fundamentally, the difference is that if you buy a condo, you're buying a specific unit and it's yours. With a co-op, you don't technically own your unit; you own a % of the co-op which owns the building and you also have the right to live in the unit. This gives the co-op board more control.

One reason why they're not very popular in Massachusetts is that they can be harder to get mortgages for. It also can be harder to sell your unit because the co-op board often has to approve any buyer before the sale goes through.

15

Ioseb_Hates_Money OP t1_ja68y8x wrote

Gotcha and thank you! Can any property be made into a coop?

3

TheSausageKing t1_ja6eps8 wrote

Yes, though for a condo building you would need all of the units to vote go co-op as you're basically tearing up the existing deed and creating a new one.

7

nattarbox t1_ja5shlr wrote

Should be pretty obvious that the benefit is paying for a fraction of the house instead of the whole thing, with the downside being you have to share it with your weird coop roommates.

11

albertogonzalex t1_ja9c3yj wrote

One way to think of it is like this - every multi unit building in the area is either a collection of condos or a multifamily single entity. The collection of condos each have their own deeds and are taxed individually. The multifamily only has one deed and one tax base.

Also, the same building sold as condos is much more expensive than the exact same building as multifamily. For example, a multifamily on my street sold for 1.2m and was renovated a bit and is now being sold as condos. One condo is going for 1.4m and another for 1.6m. no one would pay 3m for the whole building, but plenty of people will get into a 1.4m condo.

The coop approach allows people, who would otherwise not be able to purchase the individual condos, go in together to buy the building as a multifamily but as otherwise unrelated people. The overall price of the building is lower than if they were sold as individual condos and the tax base is lower.

3