Hi, we are a group of 6 adults and one child sharing 43 acres in Rhode Island. We bought the land in a hurry about 3 years ago, without all the leg work that makes these things smoother done in advanced (I know I know, but when the right place comes along you can’t pass it by!) Since then have been trying to piece it all together—our legal entity choice, our financial models, etc. We are especially stuck on what to do about members building equity and the buy in/buy out process. 4 members originally put different amounts in for the down payment. We are trying to figure out how to keep the buy in for future members low enough to welcome not just applicants with a lot of money, while at the same time allowing members who are leaving to leave with some of the money they put in/built in equity. I have looked around and cannot find anyone’s models of buy in/buy out anywhere! Does anyone have any examples of how communities are doing navigating the coming and going of members financially? I know some places you just leave with the shirt on your back, but we would like to offer a bit more financial stability to our members if possible. We would be very grateful for any assistance in finding examples to mull over! Thank you!
Good morning!
I just read your post. Did you really get no replies? Maybe you’re all set, but our group is struggling with some of the same things you mentioned. I thought I’d post a reply in solidarity. (Maybe you saw this post from September? Creative Financial Agreements?)
Our group is 12 members in 8 households, though we envision expanding to as many as 15 households. We range in age from 53 to 63, hoping to break ground in 2027, haha. Our members are from Rhode Island, Massachusetts, and New Hampshire. Each of our members anticipates bringing between $0 and $1M to the project.
We are currently divided more or less between two models: One would mimic the speculative market (think HOA buy-in/sell). The other would rely entirely on gifts and provide units for free but give no equity to members. I have a feeling our group is about to send a couple of us off to find more choices, to add some nuance to the discussion. Hence me searching the forums this morning and finding very little.
So that’s us. Don’t feel like you have to reply. I just wanted you to know that I think there are a lot of us out here struggling to find just financial models.
We haven’t done that. We follow a different model. -So I don’t know what I’m talking about. But.
Couldn’t you just add up the expenses, land/housing/sheds/fences/etc. and get a total amount. Then decide some number to divide it by, 100/500/1,000, whatever. And that gives you a fixed number of shares, and a fixed value per share. Then you figure how much each person put in, and they get an equal number of shares. When someone leaves or dies, the share can be sold back to the group, either by someone acquiring more shares, or sold to the next person wanting to move in.
Perhaps the tricky part is if one person has 1,000 shares and someone else only five, -do each get the same equal vote in decision making?
Well, maybe a start?