The cooperative is a resident-owned housing model that has been successful since the first housing cooperative in the late 1800s (NAHC, 2007). In a cooperative, residents own shares (their apartments) and a corporation (a nonprofit or for-profit organization formed by the resident-owners) owns the apartment building. Together the the resident-owners and corporation make operating decisions about their community.
Below is a quick comparison chart that compares cooperative ownership against renting, single family home ownership, and condo ownership
| Types | Cooperative | Rental | Single Family | Condominium |
| Ownership | The residents are shareholders in a corporation that owns the property. Owning a share entitles you to occupy a unit. | Tenants own nothing. On expiration of lease, tenants may be forced to vacate. | Owners acquire individual title to their dwellings and yard. | Unit “airspace” owned by individual, plus an undivided share of common elements. |
| Monthly Cost | Members pay the Co-op for their share of the actual operating cost, building mortgage, and real estate taxes, based on the non-profit operation of entire community. | Tenants pay rent specified in lease. | Owner must make his or her purchases of whatever is needed, often at higher retail costs. Owner makes mortgage and tax payments to lender. | Same as cooperative, except mortgage payments and taxes are paid directly to the lender. |
| Move-in Cost | New members buy their share in the cooperative and also pay the first monthly charge in advance. | Usually one month’s rent is paid as a security deposit, plus the first month’s rent. | Purchaser must buy the property, usually with a mortgage with a down payment of at least 5% and closing costs of 3% or more. | Same as single family, plus first month’s condo fee and often a “contribution to capital” of 1-2 months’ fee. |
| Community Control | Co-op resident members elect their board of directors, which decides all policy matters. The Board usually sets up several committees to help run the community. | Renters usually have no voice at all in establishing and maintaining community standards. | Individual owners have no jurisdiction over their neighbors. | Condo owners, like cooperatives, elect a board of directors. |
| Community Service | Co-ops provide a natural base for service and activity desired by its members. | Provided at discretion of landlords. | On your own. | Condos similar to co-ops, unless limited by state law. |
| Federal Tax Benefits to Individuals | Your share of mortgage interest and real estate taxes are deductible on personal income tax return. | No benefit. | Mortgage interest and real estate taxes are deductible on personal income tax return. | Mortgage interest and real estate taxes are deductible on personal income tax return. |
chart: NAHC
References
National Association of Housing Cooperatives, http://www.coophousing.org/about_nahc.shtml
It’s a good chart for understanding the economic and legal differences. I would like to present a rubric for comparing the social expectations, political (internal group decision-making dynamics), and continuum of other factors important to consider when choosing to live in or create a new community.