It's a tough "job" but someone "has to" do it
this post was submitted on 13 Mar 2025
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[deleted]
Sounds like a condo but residents don't have to pay an exorbitant barrier to entry.
How does this organization buy or build the apartment building?
[deleted]
Isn't that just home ownership with extra steps? How will the organization qualify for a loan without having revenues?
I think a key difference is that you have a bunch of people cooperating to buy more than any of them could on their own. Some costs are fixed or don't scale linearly, so by buying in together it can be more effective.
Also you don't always have to start from construction. You could do this by buying an extant building
[deleted]
Because you suggested the idea?
The organization (the inhabitants) charge rent based on the costs of the building.
The mortgage is just a cost. The organization is recouping its costs, including the mortgage.
A mortgage is secured with the value of the property. A sound business plan and a property worth more than the loan amount will convince some lender or another.
Mortgages secured with the value of the property tend to carry higher interest rates than mortgages secured by looking at revenues. A sound business plan typically does not involve renting at the lowest possible price. Besides, the organization still needs to come up with the down payment.
The members of the organization buy in to the organization. 4 people buying in at 5% of the purchase price, and the organization has a 20% down payment.
This is a simple, straightforward business arrangement. You don't need to show that the organization is making excess profit. You need to show that the organization is able to pay its bills. A "sound business plan" where the members are all contractually bound to the organization is not unreasonable.
Alright so 4 benefactors need to provide the down payment and pay the mortgage for years while the building is under construction. Once the building is fully rented out, rent payments will need to cover the ongoing mortgage payment + all utilities and fees + repairs + reserves for capital expenditures + some extra to cover initial down payment and mortgage payments during construction (over what time horizon?) How many people will you find who are willing to take such risks only to break even after a decade or two, rather than invest in government bonds or the stock market?
The "benefactors" you're talking about are the tenants. The owner of the building is an LLC; the owners of the LLC are also the tenants of the building. In this case, the building is a quadplex. There are no additional renters to bring in.
All of the various payments and fees you mentioned? A traditional landlord has all those as well, plus one more: profit. This LLC doesn't make a profit. Any "profit" it made would come from the tenants, and would be owed back to those same tenants. There is no profit incentive here.
Wait, if the owners of the building are also the tenants of the building, then this is just home ownership with extra steps, which was my very first comment.
[deleted]
What is the benefit of renting from yourself?
[deleted]
The example we have been using clearly stated to the owners of the building were also the tenants of the building. Are you suggesting a completely different example?
[deleted]
I am just looking for a comprehensive answer that makes sense. I haven’t read one here so far unfortunately.
I mean, something has to own the building and contract with the tenants, and that something can't have a profit motive without simply becoming a landlord. So, yes, pretty much.
Imagine if we treated housing as a service instead of something to profit from
Imagine how we would fund this service, and how we would determine who gets access to which house.
Tax the rich, use a housing coop system of your choice.
In the U.S. the top 1% pays 40% of federal income taxes. The top 10% paid 76% and the top 25% paid 89%...
Federal income tax means jack shit when most of the ultra wealthy dodge it by taking loans backed by stock.
What really gets me about these landleeches is that literally getting property for free, paid for by someone else, isn't even enough for them. Nope, equity is worthless, gotta have cash on their pockets after paying the mortgage and expenses to count as "profit."
I'll never forget the moment when it dawned on me that taxes were paying for the mortgage of the fucking idiot that I rented my flat from. I'd been out of work, and she rented to us knowing that we'd be using housing support to begin with. When we missed the second month's rent she phoned me up and yelled at me, accused me of "sitting on my arse, pissong people off".
And I had this moment of clarity that, far from being genius entrepreneurs, most landlords are just lucky enough to have the deposit for a second property, which they'll rent out and let the council pay the mortgage.
So I told her to fuck off.