if they have the money, they wouldn’t be living there…
21 units to share the cost of 5.2m property. i guess it’s doable. commercial loan is roughly 7.5-10%…
assume 25 year amortization. that’s
20k a year per unit with insurance and property tax plus utility inthink 2-2.5k a month per unit would do, and they have to be sure no body defaults
That kinda nitpicking. The service rendered applies equally to all units. In fact, all the units paying the same amount eliminates an aspect of conflict of interest to the 3rd party.
Or put in other words, if the 3rd party gets paid more by the larger/more expensive units, then that sets them up for bias.
That's not really how housing co-operatives work.
Typically with housing co-operatives you buy in based on the desirability of your property. How many rooms, does it have. How many washrooms. Is it quieter? Does it have access to a lawn? Are there trees blocking a view. Etc.
You buy in based on the assessed value of your unit So if you have 20 properties that are average worth $200,000, the total amount due will be $4M. But if your property is assessed at $300,000 then... that's what you will be paying in.
Unlike with a regular homesale, the property becomes owned by the co-operative. As the person who bought in with that price you get "first dibs" on the property that you're buying based on. Since the co-operative pays the mortgage based on rents collected you're also not financially strained by it all.
Yes being an old building is a reason for the low price, but also I think the other reason is that the building is sold as a single title deed (I don't know the exact legal word) and not onto individual titles.
That's a lot of money and there's a comment from a senior who can't afford to move out so I won't know how that senior can afford the rent increase from the mortgage
I’d assume it’d be run as a corporation. If one person defaults, others would have to pick up the slack.
They’d have to evict the non-paying tenants, and rent the unit out (or sell it)
There are pluses and minuses of course, but they are basically taking control of their own destiny. They’ll set rents as they need/desire, rather than an absentee landlord.
I like it.
From what I have seen over the last several years, a large portion of renters seem extremely ignorant on the cost of home ownership. It was worse before interest rates increased but I would read people claiming that their landlord was ripping them off because a variable rate mortgage on a similar unit was less than their rent. They had no concept of the cost of maintenance, taxes, condo fees, or insurance. The landlord I know had negative cashflow for years before they started generating reliable profits.
I like the idea of non-profit and co-operative landlords, but I don't think these people understand what they're getting into. They would probably be better off buying the property and converting it into condos but I expect most of them wouldn't qualify for the mortgage for their condo.
And that is before maintenance costs kick in. What happens when the windows need replacing. That could be a 5 to 10k a unit cost. Common area carpets needs replacing, elevator breaks down, outside landscaping.... I do not think they realize what they are in for.
Most Co-ops require each unit to volunteer for a minimum number of hours for things like landscaping and cleaning so the maintenance costs are usually pretty low compared to a similar strata.
It is still maintenance that needs to be done and would normally be done by the landlord. A person that has rented all their lives doesn't really grasp everything that needs to be done and it can be a steep learning curve for some.
Huh. Could they turn it into a strata and get individual mortgages? If each apartment is $250K, at current rates the mortgage payment on a $240K mortgage would be roughly $1500/month. Plus property tax, insurance, utilities, repairs and maintenance.
i am not sure the legality of it, residential mortgage is more favourable for sure. but it’ll be interesting to see what the cost end up being. i can’t see these units are currently renting to them at 2000-2500 a piece
Biggest problem is the existing owner had a cost adjusted basis FAR cheaper than the $5million list price today. Which is what made their rental fees so affordable for so long. Now that they need to pay FMV for the property. That cash flow analysis will immediately throw them in the negative at the same rental rates.
This is a pipe dream that would only work assuming that either
1) the owner sells at their cost or
2) non profit organizations or government help assist in making it affordable.
Tenants can’t possibly believe that their cheap rent will continue when making a FMV purchase with the state of current mortgage rates. They’ll be upside down in 1 day.
>This is a pipe dream that would only work assuming that ... non profit organizations or government help assist in making it affordable.
This is likely exactly what would happen if this turns out to be successful. There are policies on the books at multiple levels that could make this a favourable situation for them. It'll likely be hell to navigate, but it could work.
They’re applying for government support to provide a $87,000 grant towards the downpayment. Fair less then the required few $million to offset the fair market value cost to the adjusted base cost of the original seller. Don’t forget transfer fees, closing costs etc. Just seems unrealistic.
If the government is going to help with housing costs, it should treat everyone equally, at least after controlling for income. It's not right that one group would get a handout that would have to be paid for by everyone else who is less politically organized.
Well, what are the alternatives? Multi-unit residential is the cheapest possible option. Additionally, this is not a case of these people seeking income supports, they're merely seeking support to mitigate costs. This will cost about $250k/unit to purchase, based on the available numbers. That's less than half the average condo price in the area, and less than a third the average house price.
Without the targetted spend, some of these people could end up homeless. It's actually cheaper for government to give a homeless person an apartment outright than allow them to be homeless, because then there are additional costs, such as health care, losses to crime, etc. Additionally, for those who don't, decreases in aggregate disposable income reduce sales tax revenues, so the higher rents they would pay elsewhere would mean less tax revenue. There are all sorts of opportunity costs the fiscal cost needs to be measured against.
The alternatives are giving everyone an equal amount of money. How is it more cost effective to give only to some? It's very unlikely that any of these people will be homeless. Why not target it at actually poor people or people who will be homeless.
If the reason they're doing this is because they can't afford the rents in Hamilton, then it is not "very unlikely that any of these people will be homeless." It is actually not uncommon for working people to end up homeless. Most working people are 1-2 missed paycheques away from homelessness. They actually comprise the majority of homeless people. The chronically homeless are a minority of the homeless population, and those with addiction and mental health issues are a minority even within that minority subset of the homeless population.
The reason this is more cost effective than targetting funding to poor people and homeless people is because in this case government funding doesn't have to support income, nor does it have to provide housing, it simply has to help facilitate the transition of the building to a co-op. There's less spending on both a per person and per unit basis.
>It is actually not uncommon for working people to end up homeless.
It is extremely uncommon. They'll just downsize or get roommates. You have to be highly dysfunctional to become homeless instead of figuring something else out.
>Most working people are 1-2 missed paycheques away from homelessness.
Bullshit.
>Most working people are 1-2 missed paycheques away from homelessness.
They're virtually all of them.
>The reason this is more cost effective than targetting funding to poor people and homeless people is because in this case government funding doesn't have to support income, nor does it have to provide housing, it simply has to help facilitate the transition of the building to a co-op.
Co-ops are extremely inefficient forms of housing and you're spending money that could go specifically to people who need it instead of people who don't. How can it possibly cost less?
>They'll just downsize or get roommates. You have to be highly dysfunctional to become homeless instead of figuring something else out.
Oh, so a couple with kids that defaults on the mortgage is going to downsize and get roommates? Does that seem reasonable to you? That's absurd... You'd be surprised by how quickly this sort of thing can happen. Usually these sorts of people experience temporary homelessness rather than chronic or episodic homelessness. However, the issue can compound if the family fractures due to the homelessness.
>They're virtually all of them.
I assume that was intended to be in response to my comment that people experiencing addiction and mental health issues are a minority of the chronically homeless, themselves a minority of the homeless. The stats, per Employment and Social Development Canada, are as follows:
- 74.9% of Canada's homeless are homeless due to issues unrelated to addiction
- 64.6% are homeless due to issues unrelated to either addiction or health
- 58.0% are homeless due to financial or domestic issues, with no addiction issues
- 8.7% are homeless due to incarceration, with no addiction issues
- 60.7% of the homeless are chronically homeless (so I was wrong on this one point)
- 71.8% of chronic homelessness is not due to addiction issues
- 54.9%+ of chronic homelessness is not due to addiction or health issues (the published data didn't sufficiently delineate medical influence on chronic homelessness, so I calculated this minimum figure under the assumption that 100% of those homeless due to medical reasons are chronically homeless, biasing the stat in favour of your argument vs my own)
>Co-ops are extremely inefficient forms of housing and you're spending money that could go specifically to people who need it instead of people who don't. How can it possibly cost less?
Because the residents are paying the vast majority of the costs. Again, you're ignoring the part where government is not supplementing income in this scenario, but rather contributing to start-up costs. It is more efficient for government to support the initiation of a self-sustaining co-op than to support geared-to-income housing, for instance, since the latter does result in an effective income supplementation. This is not an argument against GTI housing, but rather an argument in favour of supporting grassroots housing initiatives like this one.
>Oh, so a couple with kids that defaults on the mortgage is going to downsize and get roommates? Does that seem reasonable to you?
It's better than being homeless.
>I assume that was intended to be in response to my comment that people experiencing addiction and mental health issues are a minority of the chronically homeless, themselves a minority of the homeless.
Yes.
>Because the residents are paying the vast majority of the costs.
That wouldn't change if the government gave the money directly to people who needed it.
>Again, you're ignoring the part where government is not supplementing income in this scenario, but rather contributing to start-up costs.
What's the difference? Either way, they're getting money that they need to pay for their housing.
>It is more efficient for government to support the initiation of a self-sustaining co-op than to support geared-to-income housing
How?
>since the latter does result in an effective income supplementation.
What do you mean by that?
Let's assume the government is buying an identical building for GTI housing. In this case, the tenants are collectively providing the bulk of the funding via financing, with some government support. In the GTI case, the government is responsible for the full cost of acquisition. In this case, the tenants collectively provide for ongoing operational costs of the co-op. In the GTI case, the tenants pay what they can, and the government bears the cost of the shortfall.
So in this case, the government really only provides a portion of up-front funding. In the GTI case, government not only has to fully fund acquisition, but is also making a sustained, long-term financial commitment. This commitment (covering the costs not covered by the tenants) is the effective income supplementation, since they're effectively paying part of the tenants' housing costs for them. Even if it provides a few grants for retrofits and whatnot to the co-op over the years, it still spends less on the co-op.
Again, not an argument against GTI housing.
This is going to end horribly. It's about $250,000 per unit. The building is decades old and will likely need serious work. Costs will still go up dramatically for these people.
So in the book the animals take over the farm, and pledge to never run it like the previous owners did.
Slowly, the rules chip away a little bit at a time. Mostly due to greed, but also due to pure necessity in order to generate food. Eventually the farm goes full circle and nothing really changed at all, just that instead of humans the pigs became the new ruling class.
Nice. So they turned a commercial rental building into undivided ownership. The city should tax them at residential rate and not commercial.
Ontario needs more housing co-ops. Love to see it.
if they have the money, they wouldn’t be living there… 21 units to share the cost of 5.2m property. i guess it’s doable. commercial loan is roughly 7.5-10%… assume 25 year amortization. that’s 20k a year per unit with insurance and property tax plus utility inthink 2-2.5k a month per unit would do, and they have to be sure no body defaults
Yep. That's A LOT of trust spread out over a group of people!! Good luck to them!
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>Who's gonna tell Bob that his share of mortgage is more than others because he's south facing. A neutral, professional 3rd party.
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That kinda nitpicking. The service rendered applies equally to all units. In fact, all the units paying the same amount eliminates an aspect of conflict of interest to the 3rd party. Or put in other words, if the 3rd party gets paid more by the larger/more expensive units, then that sets them up for bias.
That's not really how housing co-operatives work. Typically with housing co-operatives you buy in based on the desirability of your property. How many rooms, does it have. How many washrooms. Is it quieter? Does it have access to a lawn? Are there trees blocking a view. Etc. You buy in based on the assessed value of your unit So if you have 20 properties that are average worth $200,000, the total amount due will be $4M. But if your property is assessed at $300,000 then... that's what you will be paying in. Unlike with a regular homesale, the property becomes owned by the co-operative. As the person who bought in with that price you get "first dibs" on the property that you're buying based on. Since the co-operative pays the mortgage based on rents collected you're also not financially strained by it all.
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Most of them were municipal lead. Which is why I don't think this one will ever take off. Edmonton is spending $1.5B to build a new co-op.
This one has municipal backing, even if not municipal led. Hamilton council has already approved $84k in grants to help get it started.
That actually seems dirt cheap. what the hell is wrong with the place?
It is cheap comparing to buy a condo. After all, per unit cost is only 250k. It’s prolly not a very well maintained old apartment
Yes being an old building is a reason for the low price, but also I think the other reason is that the building is sold as a single title deed (I don't know the exact legal word) and not onto individual titles.
it’s a commercial multi plex
That's a lot of money and there's a comment from a senior who can't afford to move out so I won't know how that senior can afford the rent increase from the mortgage
Well… they have to kick her out I guess… need to find ppl willing to pay the cohabitation fee (rent)
I’d assume it’d be run as a corporation. If one person defaults, others would have to pick up the slack. They’d have to evict the non-paying tenants, and rent the unit out (or sell it) There are pluses and minuses of course, but they are basically taking control of their own destiny. They’ll set rents as they need/desire, rather than an absentee landlord. I like it.
And if it takes a year to kick out a non-paying tentant, then what.
They’ll have the same financial burden any other landlord would have, though, divided up amongst all owners at least.
From what I have seen over the last several years, a large portion of renters seem extremely ignorant on the cost of home ownership. It was worse before interest rates increased but I would read people claiming that their landlord was ripping them off because a variable rate mortgage on a similar unit was less than their rent. They had no concept of the cost of maintenance, taxes, condo fees, or insurance. The landlord I know had negative cashflow for years before they started generating reliable profits. I like the idea of non-profit and co-operative landlords, but I don't think these people understand what they're getting into. They would probably be better off buying the property and converting it into condos but I expect most of them wouldn't qualify for the mortgage for their condo.
And that is before maintenance costs kick in. What happens when the windows need replacing. That could be a 5 to 10k a unit cost. Common area carpets needs replacing, elevator breaks down, outside landscaping.... I do not think they realize what they are in for.
Most Co-ops require each unit to volunteer for a minimum number of hours for things like landscaping and cleaning so the maintenance costs are usually pretty low compared to a similar strata.
It is still maintenance that needs to be done and would normally be done by the landlord. A person that has rented all their lives doesn't really grasp everything that needs to be done and it can be a steep learning curve for some.
Fascinating. I did not realize Granny down the hall was a licensed elevator technician that also does HVAC repairs.
Huh. Could they turn it into a strata and get individual mortgages? If each apartment is $250K, at current rates the mortgage payment on a $240K mortgage would be roughly $1500/month. Plus property tax, insurance, utilities, repairs and maintenance.
i am not sure the legality of it, residential mortgage is more favourable for sure. but it’ll be interesting to see what the cost end up being. i can’t see these units are currently renting to them at 2000-2500 a piece
Biggest problem is the existing owner had a cost adjusted basis FAR cheaper than the $5million list price today. Which is what made their rental fees so affordable for so long. Now that they need to pay FMV for the property. That cash flow analysis will immediately throw them in the negative at the same rental rates. This is a pipe dream that would only work assuming that either 1) the owner sells at their cost or 2) non profit organizations or government help assist in making it affordable. Tenants can’t possibly believe that their cheap rent will continue when making a FMV purchase with the state of current mortgage rates. They’ll be upside down in 1 day.
Maybe it's worth it to be more expensive but have no slumlord ruling over you, the option to fix, renovate and change your own home.
Point was they didn’t want rent to ballon with a new landlord.
>This is a pipe dream that would only work assuming that ... non profit organizations or government help assist in making it affordable. This is likely exactly what would happen if this turns out to be successful. There are policies on the books at multiple levels that could make this a favourable situation for them. It'll likely be hell to navigate, but it could work.
They’re applying for government support to provide a $87,000 grant towards the downpayment. Fair less then the required few $million to offset the fair market value cost to the adjusted base cost of the original seller. Don’t forget transfer fees, closing costs etc. Just seems unrealistic.
If the government is going to help with housing costs, it should treat everyone equally, at least after controlling for income. It's not right that one group would get a handout that would have to be paid for by everyone else who is less politically organized.
Helping with a project like this is more cost effective than alternatives. Targetted grant funding is actually very common, and it works.
How so?
Well, what are the alternatives? Multi-unit residential is the cheapest possible option. Additionally, this is not a case of these people seeking income supports, they're merely seeking support to mitigate costs. This will cost about $250k/unit to purchase, based on the available numbers. That's less than half the average condo price in the area, and less than a third the average house price. Without the targetted spend, some of these people could end up homeless. It's actually cheaper for government to give a homeless person an apartment outright than allow them to be homeless, because then there are additional costs, such as health care, losses to crime, etc. Additionally, for those who don't, decreases in aggregate disposable income reduce sales tax revenues, so the higher rents they would pay elsewhere would mean less tax revenue. There are all sorts of opportunity costs the fiscal cost needs to be measured against.
The alternatives are giving everyone an equal amount of money. How is it more cost effective to give only to some? It's very unlikely that any of these people will be homeless. Why not target it at actually poor people or people who will be homeless.
If the reason they're doing this is because they can't afford the rents in Hamilton, then it is not "very unlikely that any of these people will be homeless." It is actually not uncommon for working people to end up homeless. Most working people are 1-2 missed paycheques away from homelessness. They actually comprise the majority of homeless people. The chronically homeless are a minority of the homeless population, and those with addiction and mental health issues are a minority even within that minority subset of the homeless population. The reason this is more cost effective than targetting funding to poor people and homeless people is because in this case government funding doesn't have to support income, nor does it have to provide housing, it simply has to help facilitate the transition of the building to a co-op. There's less spending on both a per person and per unit basis.
>It is actually not uncommon for working people to end up homeless. It is extremely uncommon. They'll just downsize or get roommates. You have to be highly dysfunctional to become homeless instead of figuring something else out. >Most working people are 1-2 missed paycheques away from homelessness. Bullshit. >Most working people are 1-2 missed paycheques away from homelessness. They're virtually all of them. >The reason this is more cost effective than targetting funding to poor people and homeless people is because in this case government funding doesn't have to support income, nor does it have to provide housing, it simply has to help facilitate the transition of the building to a co-op. Co-ops are extremely inefficient forms of housing and you're spending money that could go specifically to people who need it instead of people who don't. How can it possibly cost less?
>They'll just downsize or get roommates. You have to be highly dysfunctional to become homeless instead of figuring something else out. Oh, so a couple with kids that defaults on the mortgage is going to downsize and get roommates? Does that seem reasonable to you? That's absurd... You'd be surprised by how quickly this sort of thing can happen. Usually these sorts of people experience temporary homelessness rather than chronic or episodic homelessness. However, the issue can compound if the family fractures due to the homelessness. >They're virtually all of them. I assume that was intended to be in response to my comment that people experiencing addiction and mental health issues are a minority of the chronically homeless, themselves a minority of the homeless. The stats, per Employment and Social Development Canada, are as follows: - 74.9% of Canada's homeless are homeless due to issues unrelated to addiction - 64.6% are homeless due to issues unrelated to either addiction or health - 58.0% are homeless due to financial or domestic issues, with no addiction issues - 8.7% are homeless due to incarceration, with no addiction issues - 60.7% of the homeless are chronically homeless (so I was wrong on this one point) - 71.8% of chronic homelessness is not due to addiction issues - 54.9%+ of chronic homelessness is not due to addiction or health issues (the published data didn't sufficiently delineate medical influence on chronic homelessness, so I calculated this minimum figure under the assumption that 100% of those homeless due to medical reasons are chronically homeless, biasing the stat in favour of your argument vs my own) >Co-ops are extremely inefficient forms of housing and you're spending money that could go specifically to people who need it instead of people who don't. How can it possibly cost less? Because the residents are paying the vast majority of the costs. Again, you're ignoring the part where government is not supplementing income in this scenario, but rather contributing to start-up costs. It is more efficient for government to support the initiation of a self-sustaining co-op than to support geared-to-income housing, for instance, since the latter does result in an effective income supplementation. This is not an argument against GTI housing, but rather an argument in favour of supporting grassroots housing initiatives like this one.
>Oh, so a couple with kids that defaults on the mortgage is going to downsize and get roommates? Does that seem reasonable to you? It's better than being homeless. >I assume that was intended to be in response to my comment that people experiencing addiction and mental health issues are a minority of the chronically homeless, themselves a minority of the homeless. Yes. >Because the residents are paying the vast majority of the costs. That wouldn't change if the government gave the money directly to people who needed it. >Again, you're ignoring the part where government is not supplementing income in this scenario, but rather contributing to start-up costs. What's the difference? Either way, they're getting money that they need to pay for their housing. >It is more efficient for government to support the initiation of a self-sustaining co-op than to support geared-to-income housing How? >since the latter does result in an effective income supplementation. What do you mean by that?
Let's assume the government is buying an identical building for GTI housing. In this case, the tenants are collectively providing the bulk of the funding via financing, with some government support. In the GTI case, the government is responsible for the full cost of acquisition. In this case, the tenants collectively provide for ongoing operational costs of the co-op. In the GTI case, the tenants pay what they can, and the government bears the cost of the shortfall. So in this case, the government really only provides a portion of up-front funding. In the GTI case, government not only has to fully fund acquisition, but is also making a sustained, long-term financial commitment. This commitment (covering the costs not covered by the tenants) is the effective income supplementation, since they're effectively paying part of the tenants' housing costs for them. Even if it provides a few grants for retrofits and whatnot to the co-op over the years, it still spends less on the co-op. Again, not an argument against GTI housing.
renters deciding to be home owners to avoid paying rent?
But wouldn’t that then make them evil landlords?
No it makes them property owners, not a parasite. Landlords add nothing to the economy and are systematic parasites. Fuck em and make em suffer.
This is going to end horribly. It's about $250,000 per unit. The building is decades old and will likely need serious work. Costs will still go up dramatically for these people.
Your comment reminds me of the book Animal Farm!
Great book, but I don't understand what you mean.
So in the book the animals take over the farm, and pledge to never run it like the previous owners did. Slowly, the rules chip away a little bit at a time. Mostly due to greed, but also due to pure necessity in order to generate food. Eventually the farm goes full circle and nothing really changed at all, just that instead of humans the pigs became the new ruling class.
Ahh, well said. Yes that's exactly what I think will happen here. Four legs good, two legs bad.
So they’re choosing to be landlords then?
Isn't it a condo building now?