Financing Community Real Estate

Most groups planning an intentional community face a similar huge hurdle in their quest for affordable housing that accommodates themselves and the people they care about: financing the lease or purchase of their building or land. Below are some options other communities have used.

  • Group-financed: Community land trusts own the land upon which housing units are built, and sell or rent the units on top of it. An individual with land, who creates a legal land trust, can distribute or sell shares of ownership to others. This can be a viable option to create group ownership with low-cost implementation. The title could be held by a primary investor or original owner (if title companies are unwilling to have co-owned titles), but with a legal document that divided the ownership trust. The residents with shares might rent and make payments as a rent-to-own arrangement. However, hiring a lawyer is necessary to ensure that security laws are complied with, which are often complicated. The article below by Horowitz discusses joint purchase of land.
  • Retirement-financed: If parents use retirement funds to make a down payment or full payment for a joint purchase of real estate, it could be co-owned by the parents and their children. The investment would be more secure than many types of retirement funds, because it would be backed by land rather than subject to market fluctuations. However, definitely hire a lawyer to set this up. This option can make the land subject to debts of the children if it isn’t done correctly. There are also a fair amount of tax downsides to co-owning land as opposed to passing the land to the child, and property law generally creates rights that aren’t the most favorable for co-ownership unless there is an owner agreement that is publicly filed.
  • Credit union financed: Credit unions or small local banks are sometimes more willing to take a risk on locals. Some lenders are willing to manage a multiple-owner loan, called a mixer mortgage or fractional mortgage, and hold the title as the loan is repaid. The members who contributed to the down payment, would each have their share of payment to make, and their share of ownership. If a decision were later made to dissolve the IC, the land could be resold and investors would likely get all or part of their investments back. However, the co-owners could be personally liable for amounts they cannot pay if they decide to sell at a point that the value of the land has diminished.
  • Peer-to-peer (P2P) financed: For joint real estate purchase, for investment or co-housing, see sharetini.com. Their profiles are organized by location. You might reach out to people on their platform to suggest they join IC match to assess compatibility if they are looking for a cohousing situation. Alternatively, some simply want to share in the purchase as an investment, rather than live there.
  • Grant-funded: While organizations with non-profit status are eligible for a greater number of grants, some grants are available to community groups or businesses. Our grant writing consultants may be able to help you identify some you are eligible for and fine tune your applications. Ideas for service offerings eligible for publicly-funded support can be found in the descriptions of vocation-based ICs.
  • Business-funded: Vocation-based ICs may be able to secure low-interest business loans to purchase a residence for employee housing. Intentional communities adjacent to but not within metropolitan areas may consider offering disaster relief temporary shelter as a contracted prepaid service. While a contracted emergency timeshare may not be a realistic strategy for full financing, it can bring in additional income.

Short Term Strategies for Beginning Founders

Jointly rented house: This is a guide to finding a good value on the rental market, making adaptations, and persuading a landlord to rent to your group.

Further Reading

Hoeschele, W. (2018). The economics of abundance: A political economy of freedom, equity, and sustainability. https://www.routledge.com/The-Economics-of-Abundance-A-Political-Economy-of-Freedom-Equity-and/Hoeschele/p/book/9781138383371

Horowitz, B. (2021). How to co-purchase and thrive on a land share. https://issuu.com/cowichanvalleyvoice/docs/april_2021_issue_149_web

Phil. (2020). Co-buying property with friends: Learning to love the process. https://supernuclear.substack.com/p/co-buying-property-with-friends?s=r