Highlights The high cost of living in some areas prompts some people to pool their resources. It’s a quid pro quo arrangement. Homeowners get extra income; renters get shelter. Communication is key to sorting out domestic duties and avoiding misunderstandings. The women in the television show “Golden Girls” were usually discussing their love lives over cheesecake at the kitchen table, not dividing up the costs of living in a swanky condo in Miami. But real-life boomers and seniors living in shared housing are drawn to bottom-line benefits that may have been mere afterthoughts for Blanche, Dorothy, Rose and Sophia. “They came together for friendship, but a lot of people are finding that it’s the income that’s the motivation,” says Annette Leahy Maggitti, co-president of the National Shared Housing Resource Center and home-sharing counselor at the St. Ambrose Housing Aid Center in Baltimore. The National Shared Housing Resource Center connects people with information about home-sharing programs in their local communities. The arrangements typically involve homeowners offering rooms for rent, or occasionally, in exchange for services. Gray Panther founder Maggie Kuhn, who lived in a large Philadelphia house she shared with several others, established the NSHRC in 1981.
I love this concept and I believe this is one that many retirees should consider.
Years ago my brother Bill and I lived next to each other in South Fort Myers. Sunday mornings while the wives slept in we would jump in the car and go look at property or boats. One Sunday we decided to go look for a dock slip to rent or buy so we could house our boat. Up to this point every time we went boating we had to trailer the boat
to a boat ramp. (This little trip was a good combination of our passions – real estate and boating!).
After meandering around for a while, I saw a sign on a dock on the way to Fort Myers Beach and called Marty Wallerstein, the agent on the sign. Marty informed me this was actually not a dock for sale but a house with a dock. I told Marty what we were looking for and he said he had a perfect home with room for a boat in the back yard. (For those of you that know me, this is a typical Bill and Gregg story – go out looking for boats and come back with a house!)
The home was a tri-plex with the top floor elegantly furnished, a three car garage, a boat slip that would let us be minutes by boat from the Gulf of Mexico- and it came complete with two tenants in the two efficiencies on the first floor. Bill and I had owned boats together before and loved the economies of joint ownership. We normally “played” on our boat together anyway and owning it as partners made everything, in essence, “half price”.
The next day, after doing some research, we made a deal on the property. I decided to try to put together the purchase of this “income” property with a few friends. Here is how we worked it out:
My brother Bill and I and two friends from Scotland each put $30,000 into a separate account. This money was used as the down payment and as a cushion for any negative cash flow. We also needed some funds for a lawyer to draw up the agreement and a few repairs on the property.
We agreed that we would each be able to use the house for two months a year. The prime rental months we would leave for rental in “season” – January, February, March, and April. We would choose our personal use months by lottery. (Actually we never had to do this – over the five years we owned the place there was never a conflict on using the place.) I calculated the “break-even” amount we would need to bring in as rent and I agreed to manage the property.
We owned and enjoyed this vacation retreat a half hour from our home for five years, never had a cash call, and sold it at a handsome profit (That was three years ago). All in all the partnership was a very positive experience and one that I can recommend to you – with a few changes.
Let me tell you what I didn’t like about the deal. Unlike a Condo, with a home like this there were maintenance and management issues all the time. Whenever Bill and I went to the house there was something that had to be fixed, or cleaned, etc. It made our visits less enjoyable. The manager of a deal like this should get his share for less money – or free.
If this home were a condo – this maintenance issue and management issue would have been taken away from us. A condo in a resort area is a wonderful
property to buy with partners. The partners can each enjoy the condo, the maintenance to taken care of, and because you have partners you can afford a
more expensive condo and spread your risk out among partners.