If you heard the word “cooperative” and pictured something complicated, you’re in good company. Most people who call us have never lived in one, and a fair number have already been told by a friend or a son-in-law that in a co-op “you don’t really own anything.” Here is the short answer, and then the long one.

The short answer

A housing cooperative is a community that the people who live in it own together. Each Village Cooperative is set up as a not-for-profit corporation. Instead of buying a home outright, you buy a share in that corporation. Your share gives you three things: the right to live in a specific home, one vote in how the community is run, and an asset that increases in value each year at a set rate that can be sold or left to your heirs.

The cooperative owns the land, the building, and everything in it, so there is no personal mortgage to apply for. Once you move in, you pay your portion of the monthly expenses that cover the costs of running the cooperative: the master mortgage, property taxes, insurance, water and sewer, trash, staff, maintenance inside and outside your home, and the reserves that keep surprise bills off the table. There is no outside owner collecting rent and no company taking a profit. The members are the owners, and a board you elect sets the budget.

That’s the whole idea: the benefits of owning a home without the hassles, in a community of neighbors who own the place right alongside you.

Want to know how that actually works, and why it’s different from a condo, an apartment, or the house you’re in now? Keep reading.

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Cooperatives have been around a long time

You already know cooperatives, even if you’ve never lived in one. A credit union is a cooperative: the members own it, and it exists to serve them rather than outside shareholders. Farmers have bought and sold through cooperatives for generations, rural electric cooperatives keep the lights on across much of the Midwest, and many towns have a cooperative grocery. The idea is always the same. The people who use the thing own the thing.

Housing cooperatives apply that idea to a building. Senior housing cooperatives, built for active adults who want ownership without the upkeep, began in Minnesota in the 1970s and have a track record of more than 40 years. The company behind Village Cooperative has roots in cooperative housing going back to 1972 and has been developing senior cooperatives since 2003, with communities across the country.

One reason the model has held up: there is no speculation in it. A Village Cooperative doesn’t break ground until the majority of its homes are sold to members, and most communities sell out before anyone moves in. The people who will live there are in place before the first shovel hits the ground.

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What you own

When you join a Village Cooperative, you purchase an equity share in the cooperative corporation and receive a membership certificate. You don’t receive a deed, because the corporation holds title to the whole property: the land, the building, your home and every other home in it, and the common areas, from the community room and fitness room to the guest suite and the heated underground garage. A typical Village Cooperative is three or four levels with 50 to 65 homes and at least one underground parking stall per home.

Here’s one way to picture it. In an apartment, you hand your money to whoever owns the building, and you own nothing. In a condo, you own a slice of pie on your own plate: your four walls in, and everything inside them is yours to fix. In a cooperative, you and your neighbors hold the whole pie together. You collectively own the land, the building, and everything in it, and when the refrigerator dies, the cooperative replaces it.

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Two rules make this work. First, one membership equals one vote, regardless of home size or share value. Second, the cooperative is not-for-profit. There is no one to pay a profit to. You are only paying your expenses.

“[E]ach of us has one share, so we each have one vote [to] determine what our future is, but more importantly to me was the fact that we could own this share, we could sell this share.”  —Member, Village Cooperative of Bismarck, North Dakota

“[Y]ou own the entire facility. And anytime you have a little skin in the game, it always makes you a little bit more responsible.”  —Village Cooperative member, from our member stories video

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What you pay, and why there are two parts

Every conversation about cooperatives gets to money quickly, so here is the structure. The specific numbers for a given community come from your Sales Manager, because they depend on the home, the floor, and when you reserve.

You pay two things.

The share purchase is a one-time payment, made before construction. It is the price of your ownership. Its value is based on the size of the home and its location in the building, and it is a fraction of what a comparable home costs in the same area. It isn’t rent. It’s your equity, and it increases in value each year at a set rate, so you know what your share will be worth years from now.

Monthly expenses begin when you move in. They are your portion of the cooperative’s annual operating budget, divided among the homes. That budget covers interior and exterior maintenance, lawn and landscaping care, snow removal, water and sewer, trash removal, fire and liability insurance, member services staff, replacement and operating reserves, property taxes, the master mortgage, and miscellaneous operating costs. It isn’t something added on top of ownership. It is the actual cost of running the building you own, split with your neighbors. There are no à la carte charges for pets, parking, or a spouse. You are the co-op, so you are simply paying your expenses to live there.

Why both? Because they do different jobs. The shares are what allow the cooperative to close on its construction loan and start building. They don’t cover the full cost of the building; the balance is financed through one master mortgage held by the cooperative and paid down over the long term as part of the monthly expenses. That is deliberate. Financing part of the building keeps the share price reasonable and the monthly expenses predictable, not just for you but for the members who buy in after you.

Which brings up the question we hear most: Do I need a mortgage? No. The cooperative holds one master mortgage in its own name. No member applies for one, and no member has a personal obligation for it. That is a large part of why buying and selling a share is so much simpler than a traditional real estate transaction. Members may deduct their individual portion of the property taxes and master-mortgage interest on their federal and state income taxes.

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“When people say, ‘What’s the HOA that you have to pay?’ Well, it’s not an HOA … but it provides everything for you.”  —Member, Village Cooperative of Bismarck, North Dakota

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Who runs it

You do, with your neighbors. Members elect a board of directors from among themselves. The board manages the bylaws that are set up ahead of time, controls costs, and oversees operations, with professional management and on-site staff handling the day-to-day work. Their cost is part of the monthly expenses. Committees form around whatever members care about: the wood shop, the cable and internet package, the social calendar. Participation is a choice. There will not be an activities director knocking on your door encouraging you to play bingo.

The board’s biggest job is the budget. Because the cooperative is not-for-profit and owned by the people who pay the bills, expenses aren’t set by an outside owner or a management company looking for a return. They are set by members, for members. They go up a little over time, as all costs do, but the decisions are yours. And part of every month’s expenses goes into savings for the building’s future. Two reserve accounts, one for operations and one for replacement, are funded as fixed costs. When the roof needs replacing, the cooperative pays for it from reserves, and members get no surprise bill.

“[W]hether it goes up or down will depend on you as a board. Which is what I liked. We were actually in control of all the monies we were paying in. It wasn’t some other entity that was going to be in control of it.” 
‍—Member, Village Cooperative of Erie, Colorado

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How a cooperative compares

From the outside, a Village Cooperative looks like a condominium. The ownership structure and the culture inside are different, and members will tell you those two things are why they chose it.

People often say condos are maintenance-free. In a condo, “maintenance provided” usually means the outside of the building and the grounds. Inside your four walls, the furnace, the water heater, and the appliances are yours to fix, and each owner arranges his or her own mortgage. In a cooperative, the cooperative maintains the building inside and out, including your home, and the mortgage belongs to the cooperative. Members also have a say in what happens, rather than a third party deciding.

A cooperative is not assisted living or a retirement center, either. There is no meal plan, nursing staff, or large service staff built into your costs, because you are not paying for services you don’t use. It is independent ownership for active adults. If you ever want home health care or other services, they can be brought to you, just as they could in any home.

Here is the whole picture in one place.

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“People say condos are maintenance-free. No… no. This is total carefree living. They even replace my light bulbs.”  —Village Cooperative member, from our member stories video

What people get wrong about cooperatives

• “You don’t really own anything.” You own everything, collectively. Your share is a real asset with a value that grows at a set rate, and it is yours to sell or to leave to your family. Your Sales Manager can show you the legal documents that spell this out.
• “If I’ve paid for my share, why is there a monthly?” The share buys your ownership. The monthly expenses run the building. A house works the same way: you own it, and you still pay taxes, insurance, utilities, and repairs every month. The difference is that here, the repairs are already covered.
• “It’s just a condo.” Different ownership, different responsibilities. In a condo you own your four walls in and fix what’s inside them. In a cooperative you own a share of everything, and the cooperative maintains everything, including your home.
• “It’s a rental with a big deposit.” Rent buys you nothing when you leave. A share is an asset that grows in value at a set rate and comes back to you, or your heirs, when it’s resold. And no outside owner can raise your monthly expenses to improve their return; the budget is set by your own elected board.
• “I’d have to pay cash for the share.” You don’t have to. The most common approach is a home equity line of credit, which lets members stay in their house through construction and pay off the line when the house sells; others use the proceeds from a sale or draw on investments. Your Sales Manager has seen every version and will help you think it through.
• “It’s for people who need care.” No. A cooperative is independent living for active adults who want to own their home without maintaining it. It is not assisted living, and you aren’t paying for services you don’t use.

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“Village Cooperative is an investment. It is not a place you go pay rent, and then you’re not going to have anything to show for it down the road.”  —Founding member, Village Cooperative of Marshalltown, Iowa

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The part we can’t build

Ownership changes how people treat a place, and each other. Members describe a spirit of ownership: everyone takes responsibility, whether that means the condition of the hallway or the birthday party in the community room. Every home is owned and lived in by a member; there are no rentals. And because the homes sell before the building opens, the community starts forming at the monthly member meetings, a year or more before anyone moves in. By the time the doors open, most people already know their neighbors.

We can build the spaces where community happens. The community itself comes from the members. As one of our sales leaders likes to say, we just build a building.

“We had looked at [another senior community] as the next step for us, but this offered so much more in ownership and security and everything.” 
‍—Member, Village Cooperative of Bismarck, North Dakota

The cooperative model, in brief

• A not-for-profit corporation owned by the members who live there.
• You buy a share, not a deed. The share is your equity, and it increases in value each year at a set rate.
• One membership, one vote. Members elect the board, and the board sets the budget.
• The cooperative holds one master mortgage. You don’t apply for one.
• Monthly expenses are your portion of the cooperative’s operating costs, including maintenance inside and outside your home and reserves for future repairs.
• Members may deduct their individual portion of property taxes and master-mortgage interest.
• Selling is simple: the cooperative resells your share at its set transfer value, with no closing costs. It can also be left to your heirs.
• Every home is owned and lived in by a member. Activities are member-run, and participation is your choice.

Is a cooperative right for you?

A cooperative fits people who want to own rather than rent, who would rather keep the equity they’ve built than spend it down on rent, who are done with the roof and the yard and the furnace, and who like the idea of neighbors who are invested in the place the way they are. Every Village Cooperative is age-restricted for active adults (55+ or 62+ depending on location), and it is independent living: the cooperative provides a home and a community, not care.

If that sounds like you, the next step is a conversation. Pricing, floor plans, and availability differ by community, and they make far more sense with a Sales Manager walking you through them than they would on a web page. If you’d like to see the steps from that first call to move-in, they are laid out in What Happens After You Contact Village Cooperative?

Ready to learn more?

Every Village Cooperative community in development has a local Sales Manager whose job is to answer your questions, as many times as you need to ask them. Call, or join us at the next FREE Informational Seminar, where you’ll hear how the cooperative model works, see the floor plans, and meet other people asking the same questions you are. It Feels Like Home. Because It Is.