ECONOMIC ADVANTAGES

Affordable
Lower down payment, much lower closing costs, economies of scale, longer mortgage term all make co-ops more affordable than other ownership housing.

Living in a Co-op Stays Affordable
Members have no reason to substantially increase monthly charges unless taxes or operating costs go up, so monthly charges remain reasonable.

Tax Deductions
For income tax purposes, the co-op member is usually considered a homeowner and, as such, can deduct his or her share of the real estate taxes and mortgage interest paid by the cooperative.

Equity
Co-ops can provide for accumulation of individual member equity. For market-rate co-ops, the accumulation of equity and resale prices are based on the market. Limited-equity co-ops establish limitations on the accumulation of equity to assure long-term affordability to new members.

Limited Liability
Members have no personal liability on the co-op mortgage. The cooperative association is responsible for paying off any mortgage loans. This can often make it possible for persons whose income might not qualify them for an individual mortgage to buy a membership in a limited equity co-op.

Consumer Action
Through their cooperative association, members can jointly exert influence in order to change tax rates and utility prices and obtain improved services from local governments. The co-op, as consumer advocate, can also join with other organizations.

Savings
Co-op members can benefit from economy of scale in co-op operating costs as well as from not-for-profit operation. Also, when there are "transfers", only the out-going member's equity must be financed by the incoming member. Transfers of shares are subject to fewer settlement costs.

SOCIAL ADVANTAGES

Elimination of Outside Landlord
Co-ops offer control of one's living environment and a security of tenure not available in rental housing.

Community Control
As mutual owners, member residents participate at various levels in the decision-making process. This is not true of tenants who usually do not have the opportunity to exercise responsibility. Members own the cooperative together and have the security of being able to remain in their homes for as long as they wish, as long as they meet their monthly obligations, and abide by the co-op bylaws, rules, and regulations.

Cultural Diversity
Many co-op members indicate that the possibility for interaction with people from different backgrounds, cultures, and income levels is a positive factor in their decision to become a member.

Extended Services
By establishing cooperative procedures and working together, people are able to provide services for themselves that otherwise would be impossible to obtain. When one cooperatively organized venture is successful it often becomes clear that people can be successful in another area as well. As a result, the original effort often can be strengthened. Examples include athletic teams, co-op preschools, credit unions, tutoring, food-buying clubs, arts and crafts, and senior health care and support services.

PHYSICAL BENEFITS

Shared Maintenance Responsibilities
Co-op members usually have limited direct maintenance responsibilities. The cooperative association is responsible for major repairs, insurance, replacement of worn-out equipment, and upkeep of common grounds and facilities.

Vandalism and Security
Co-op members vigorously protect their association's property. An important benefit of converting rental properties to co-op ownership is reduction in vandalism and abuse of property and improved and shared security arrangements. And recent studies show that the co-ops presence in the neighborhood brings neighborhood crime down.

STANDARD CO-OP PRACTICES

Members of the National Association of Housing Cooperatives agree that cooperative housing associations are most successful when operated in accordance with specific recommended practices, in addition to the general co-op principles.

The cooperative's board of directors should keep its members informed of all its actions. A regular communication system-a frequent newsletter, information bulletins, special meetings, solicitation of members for opinions and priorities-strengthens the relationship between the board of directors and the members. Leader accountability is central to the co-op concept. The board of directors should depend upon the two-way nature of communication to guide them in all decision-making.

The cooperative association must maintain adequate financial reserves to protect the cooperative and its members' interests. These usually include a general operating reserve and a reserve for replacing components of buildings as they deteriorate. Such reserves reduce the possibility of members having to pay unexpected special charges in emergencies. An annual audit should be conducted by professional accountants and made available to all members.

To protect the interests of the remaining residents, the co-op board must have the right to approve incoming members who take the place of those leaving the cooperative. A credit check and a visit with the membership committee are usually required. This process also helps orient the incoming member to their rights and responsibilities as co-op members.