by Kim Kash, Greenbelter and Realtor with Caprika Realty
Getting educated on the home-buying process is a big job, and there are plenty of great resources out there to guide homebuyers. Anyone starting to do their research may have heard about “fee simple” versus “condo or co-op” purchases. (No? Okay, don’t worry, this will bring you up to speed!)
However, there isn’t as much information out there about why you might want to choose cooperative home ownership as a smart and carefree alternative to fee-simple ownership.
Here we’ll talk about what a housing co-op is, and why you might want to choose a home in the Greenbelt Homes (GHI) community, one of the nation’s oldest and largest housing cooperatives. In an upcoming article, we’ll get into the nuts and bolts of how to buy in GHI.
What’s the difference between “fee simple” ownership, and condo or co-op ownership?
Owning your home “fee simple” means that you, and you only, own the property. As long as you keep paying the mortgage, it’s yours; you call the shots. Nobody else does. The financial decisions having to do with the property (should I put a new roof on? should I fix the leak in the basement?) are yours and yours alone. You do what you like, and you pay for it.
This is an oversimplification, obviously: the county might step in if you let your house fall into terrible disrepair. And there may be a homeowners association that complains if you install a stockade fence around your front lawn. But by and large, it’s your property, your decisions, your money spent (or not) to keep it up.
Condos and co-ops, on the other hand, pool their members’ resources and make decisions together for the good of the community. They handle the big expenditures and decide what the maintenance priorities are. In exchange for payment of a monthly condo or co-op fee, owners (or “members”, in the co-op parlance) generally don’t have to worry about saving big money for stuff like new windows, or broken water pipes, or repaving of parking spots.
Buying into a condo or a coop is like ownership “lite.”
A co-op or condo is a great way to enjoy the benefits of home ownership without having full responsibility for the maintenance and upkeep of major (read: expensive) items. Both condos and co-ops collect a monthly fee to cover a list of items for the benefit of its members. What’s on that list varies from association to association: some pay utility costs, some cover taxes, some even mow your lawn! But the common theme is that everyone chips in to pay for stuff that benefits each member and the community as a whole.
Another thing common to condos and co-ops is their ability to create rules and guidelines that work to maintain the quality of the community. Some members might complain about being limited in what they can do to their home. However, in dense housing communities like GHI, guidelines are necessary to prevent that one guy in the middle of the row from parking a rusted-out Ford pick-up on the lawn and painting his siding neon orange. Right?
As a Realtor, one of the things I hear most often by people who have decided to move to GHI is that they’re hungering for a real community. People are looking for alternatives to an anonymous suburb. They want a place where people know and interact with their neighbors. The very structure of GHI as a housing co-op encourages this interaction, and it is this spirit of cooperation that gives our community its distinctive flavor.
As one of the nation’s original cooperative communities, the town is built around pedestrian walkways and designed specifically to be walkable and to be focused around the central town plaza. Greenbelt—and GHI—is definitely not your average suburb. Its neighborliness is baked right into its design.
So it’s fitting that GHI members pool their resources to take care of the place. Every month, GHI members pay a co-op fee, which varies based on the size and type of their home. The co-op fee covers the following:
- all property taxes
- insurance for everything except owners’ personal possessions and liability
- reserves for major projects
- exterior maintenance
- basic interior maintenance of plumbing, wiring, and structural elements
An exact description of what maintenance items are covered can get complicated, not surprisingly. Generally speaking, the plumbing and wiring, the walls and windows and roof are covered. The basics. Appliances, upgraded flooring choices, and all the other bells and whistles that a house-proud co-op member might install, are not covered.
Unlike co-op members, single-family homeowners must plan, save and be ready to put on a new roof, repave a cracked driveway, fix a leaky basement, upgrade an outdated electrical box whenever needed. With fee-simple ownership, the big, scary, no-fun maintenance expenses are always lurking. If a fee-simple homeowner doesn’t have money put away for such things, you can be sure their furnace is going to die in the coldest part of February, and they’re going to be scrambling to figure out how to pay for it.
Not so for GHI members! Members just pay their GHI fee every month, and they can sleep at night knowing that they are automatically covered for all of the nastiest homeowner expenses. This is the principle of cooperative living, and it’s why so many people move into the community and love it.
GHI members themselves determine how money gets saved and spent, and what issues need to be addressed within the community. They do this by serving on the Board of Directors or being active one or more of its committees. GHI has a big annual meeting where the Board is elected, and every month there are multiple board and committee meetings. GHI members are actively encouraged to get involved.
Does this sound like the kind of active, involved lifestyle that you’d enjoy? If so, then a GHI home might be just right for you.
Next time, we’ll talk about the process of buying into Greenbelt Homes, Inc. It’s a bit more labor-intensive than buying a fee-simple property—but if you’re looking for affordable living in a tremendous community, in an unbelievably convenient location, then you’ll find it’s worth the extra steps.
Kim Kash, Realtor
An Equal Housing Opportunity